Could The Commonwealth State Store System be a Post Virus Opportunity? - Paycheck

Could The Commonwealth State Store System be a Post Virus Opportunity?

Pennsylvania has a fairly impressive collection of perennial gripes: the roads, the weather, and depending on one’s loyalties and location the inability of Pitt to field a winning football team or Penn State a notably successful basketball team with any consistency.

Among those is surely the Commonwealth’s state store system, a monopoly on the sale of wine and hard liquor established in the wake of Prohibition by a Republican Governor far from certain that Repeal was a remotely good idea and that the sale of alcohol should be restricted as tightly as possible.

Pennsylvanians have been complaining ever since.

The always-simmering idea of selling the stores, tossed around for at least forty years, is almost certain to come to the forefront in the months ahead, as Pennsylvania lawmakers wrestle with a budget shortfall of well over a billion dollars in the wake of the Covid-19 virus.

In fairness, the stores have been vastly modernized beginning in the nineties, with longer hours and a wider selection. Sales of beer and wine in grocery and convenience stores has become routine, and aggressive efforts by them have allayed concerns that such an expansion would lead to an increase in underage drinking.

The other running complaint about the stores is cost. Customers who live near a state line have long routinely purchased their liquor needs before returning home. The cost difference, though, is almost completely a matter of taxation: Pennsylvania levies both a sales tax and an excise tax (first enacted after the Johnstown Flood in 1936. In Delaware, which has neither tax, alcohol is unsurprisingly cheaper.

Alcohol is also marked up by the state stores, which brings half a billion dollars a year into Pennsylvania’s coffers—but it should hardly be imagined that the national liquor chains that would replace them operate as public charities.

Nonetheless, it is clear that the state store system is a man without a political country. It was least grudgingly supported for decades by legislators who knew the revenue spared them from voting for a tax increase or whose rural constituents disliked the idea of widespread alcohol sales, as well as those whose politics committed to protecting the unionized jobs in the stores.

Of those, only the last remains, and it is fading as Democratic legislators increasingly come from suburbs where a union hall is little more than something remembered from an old movie. Rural antipathy to alcohol seems a thing of the past, and short-term budget woes may trump any desire to maintain the present flow of revenue.

Pennsylvania legislators this week will pass a five-month budget with no change in spending, which hints at the one thing that may save the state stores: legislative inertia. Dismantling the system—which is really two systems, a retail and a wholesale

system—is a cumbersome, complex process that requires creativity, attention to detail, and meaningful oversight, all of which seem to be in short supply in Harrisburg in 2020.

Still, the state stores devised almost ninety years ago by Gifford Pinchot are almost certain to be back in the headlines, and the subject of endless discussion and complaint, later this year.

Michael O'Connell

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