Republican liquor privatization proposal passes divided House as budget talks continue

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HARRISBURG, Pennsylvania — A divided state House on Thursday sent a new proposal to privatize Pennsylvania's government-run liquor system to the Senate, a plan not much different from a Republican-backed bill that Democratic Gov. Tom Wolf vetoed in June.

The House voted 110-86 for the measure, which was billed as a step forward in broader, closed-door negotiations to resolve the state's budget stalemate, currently in its fifth month.

House Republicans have made it a priority to privatize the state-controlled wine and liquor system, and some form of it could win approval as part of a budget deal.

"This is a critical part of the budget negotiations," said Rep. Chris Ross, R-Chester, who is chairman of the House Liquor Control Committee. A vote, he said, would "move the process forward."

Six Republicans joined every Democrat in voting against the measure after a very brief floor debate.

"This bill is a bad deal for our fine wine and spirits workers," said Rep. Paul Costa of Allegheny County, the committee's ranking Democrat. "It's a bad deal for our small business owners. It's a bad deal for consumers and it's a bad deal for our commonwealth."

The bill, sponsored by Speaker Mike Turzai, R-Allegheny, would result in the closing of all of the about 600 state wine and liquor stores and create 1,200 new permits to sell wine and liquor.

Beer distributors would get the first opportunity to buy the permits on a sliding price scale based on the size of their counties, from $30,000 for wine and $52,500 for liquor in Pittsburgh and Philadelphia, to $7,500 for wine and $30,000 for liquor in the least populous areas.

After six months, the remaining permits would be auctioned off.

The wholesale system would be leased to a state-licensed importer for a decade, after which it would be given a permit to operate the system for a fee of 5 percent of the gross receipts.

Other provisions would let restaurants and hotels sell wine and liquor for takeout, and allow wine sales at grocery stores.

An analysis by the Appropriations Committee said the bill would produce about $431 million for the state treasury in the current fiscal year, and about $300 million in 2016-17.

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