ROBERT SWIFT: Capitol Matters: Will state gamble on liquor revenue
HARRISBURG - The slogan "slots for tots" was bandied about at the Capitol more than a decade ago when a gambling legalization bill sought to link potential state revenue from slot machines with education funding.
The 2004 law that legalized slot casinos in Pennsylvania targeted a share of slot revenues for school property tax relief instead.
Now a variation on the "slots for tots" theme is surfacing with Gov. Tom Corbett's proposal to create a new $1 billion, four-year state education block grant with revenue obtained from privatizing the state-run liquor system.
The debate over liquor privatization will be fought along the lines already laid out this week by Mr. Corbett and skeptical Democratic lawmakers.
The governor sought to drive his initiative home by releasing a breakdown of what school districts would receive over four years if his plan to sell the state liquor stores is approved by lawmakers. School districts in Northeast Pennsylvania would receive $78 million over four years under this proposal to use for school safety, early education, individual learning and science, technology, engineering and math courses.
"Let's get Pennsylvania out of this outdated system of selling alcohol once and for all, and reinvest the proceeds into Pennsylvania's future - our children," said Mr. Corbett.
House Democrats oppose the idea.
"Instead of relying on a one-time, hypothetical funding gimmick by linking alcohol sales to temporary public school funding, we need to work on a sustainable plan," said House Democratic Appropriations Chairman Joseph Markosek, D-25, Monroeville.
The $1 billion in one-time funding doesn't compensate for two years of cuts in state aid to basic education, added Mr. Markosek.
The governor's plan calls for issuing 1,200 retail liquor licenses over four years and a number of wholesale licenses as well. He would create new license classifications to sell beer and wine in big box retailers, grocery stores and pharmacies and sell beer only in convenience stores.
The total revenue yield from this transition over four years would be $1 billion, according to a study by Public Financial Management Inc. for the Corbett administration.
The breakdown is $575 million from wholesale license, $224 million from an auction of wine and spirit store licenses, $107 million from wine and beer licenses for stores and $112 million from an expanded beer distributors license that allow for sales of six packs and bottles of wine.
The PFM revenue estimates are based on broad assumptions that carry some risk, according to a memo by the House Democratic Appropriations Committee.
There is no requirement for minimum bids when auctioning the retail licenses which could reduce estimates of up-front revenue, the committee said. It's based on assumptions for greater alcohol consumption due to the number of private establishments selling beer and wine and paying annual license fees.
"If these assumptions do not materialize, neither will profits to the state," the memo said.
ROBERT SWIFT is Harrisburg bureau chief for Times-Shamrock Communications newspapers, of which The Daily/Sunday Review is a part. Email: firstname.lastname@example.org.