More options to deal with state’s debt
Frustrated with the budget impasse, Gov. Wolf recently offered several proposals as a way forward with the Pennsylvania legislature. Among those plans, the governor announced that the state would securitize profits from the Pennsylvania Liquor Control Board (PLCB) to raise $1.25 billion to pay off the prior year’s deficit.
The thing about borrowing to pay off debt is that eventually those bills come due. This is of particular concern considering the agency recently raised prices on spirits and wine products due to increased operating costs.
Pennsylvania consumers are now paying more for many of their favorite wines and spirits to subsidize the state operation. And having the state take on $1.25 billion in debt securitized by PLCB profits will significantly exacerbate this financial burden for years to come.
But there are steps the Pennsylvania legislature can take to mitigate the impact. The House Liquor Control Committee recently approved the expansion of the number of outlets allowed to sell spirits in Pennsylvania, which according to our economic analysis could net the state $100 million in potential additional revenue.
Allowing spirits sales in grocery stores, beer retailers and restaurants is a way of providing consumers with one-stop shopping, while allowing PLCB to generate more revenue without raising prices.
And while the PLCB will generate additional revenue, the agency won’t incur the capital burden or risk of opening additional state-run stores. Expanding the number of spirits outlets is a common-sense solution that benefits state coffers and consumer convenience. If the PLCB is going to be forced to take on $1.25 billion in debt, it should be given the tools to service that debt.
Chief Economist, Distilled Spirits Council