Leaders of both houses of the General Assembly are actively discussing some level of liquor privatization as part of the enactment of a state spending plan for the fiscal year that begins July 1, according to several legislative sources.

The discussions range from a total sell-off of the state stores to a partial approach—allowing beer and wine sales in grocery stores.

Officials of the state House of Representatives and Senate declined to comment publicly on the talks, but sources who asked not to be identified said a gaping deficit and election-year politics might be the impetus that gets legislation to Gov. Tom Corbett on or before the June 30 deadline for a budget.

“We’ve run out of smoke-and-mirror ways to shift money around, and in an election year higher taxes are out of the question,” one House source said.

The Office of the Budget estimates the hole in the budget could approach $1.4 billion by June 30. A complete sell-off of the system would net between $800 million and $1 billion, according to a coalition of businesses lobbying for the sale of the stores. Some of the members in the coalition include the Pennsylvania Food Merchants Association, the National Federation of Independent Business, the Pennsylvania Chamber of Business and Industry, the Distilled Spirits Council of the United States, and the Pennsylvania Business Council.

A recent letter from the coalition to lawmakers said, “In America, retailers compete freely for customers buying adult beverages; except in Pennsylvania, where beer, wine and spirits sales are buried in the time capsule of the Prohibition Era.”

Organized labor, led by the United Food and Commercial Workers Local 1776, opposes privatization.

Last March, the House approved a complete sell-off plan, but it died in the Senate, where an alternative bill proposed keeping the state stores but modernizing their operations. The Senate remains the bigger challenge for any privatization, according to a legislative source.

“The votes are clearly there in the House, because they already approved a plan, but my understanding is the Senate is still one or two short,” the source said.

In the past, state Rep. Mike Turzai, R-Allegheny, majority leader of the House, has insisted that the General Assembly send Corbett a complete sell-off of the system, or nothing at all. Now a source in the House Republican Caucus said Turzai might be willing to settle for a partial privatization—allowing the sale of beer and wine in grocery and convenience stores—as a step toward complete divestiture.

“The thinking is that when consumers see how much more convenient it is to buy beer and wine, they will insist we get out of the business altogether,” the source said.

— John L. Kennedy, for the Law Weekly