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Report Finds Problems With Liquor Control Board

A report from Pennsylvania's Auditor General found technical errors leading to shortages and hoarding of merchandise.

By Yasmin Tadjdeh | PA Independent

The Pennsylvania Liquor Control Board faced widespread inventory shortages of alcohol and subsequent "hoarding" in fiscal 2009-10, a recent Pennsylvania auditor general’s report shows. 

The agency, known as the PLCB, regulates alcohol sales at Pennsylvania’s 650 state-owned liquor stores. It spent $500,000 storing excess inventory, said the annual report, released this month by Auditor General Jack Wagner. 

The PLCB is funded entirely with revenue from the purchase of wine and spirits, so the loss of $500,000 was not taxpayer money. 

The auditor general’s report found that PLCB's electronic inventory system did not predict the inventory the stores needed accurately, causing major shortages in products. To compound the issue, the employee in charge of inventory management retired, leaving employees to learn the system quickly. 

In response to the shortages, the PLCB began mass ordering items, which were improperly stored, the report said, although whether the products spoiled is unclear, with the PLCB claiming they had not. 

Stacey Witalec, spokeswoman for the PLCB, said the system's problems have been resolved through "working with store managers" and further training employees with the new system. She declined to discuss the details of the policy changes. 

The auditor general’s report is “proof positive of the ineptitude” of the PLCB, said Steve Miskin, spokesman for House Majority Leader Mike Turzai, R-Allegheny. 

The PLCB does not care about the consumer, Miskin said. 

“Government is not meant to be a business.” Miskin said. “Clearly retail business is a private-sector action.” 

Turzai recently outlined HB 11 before the state House Liquor Control Committee. The bill would privatize the state’s liquor stores and remove Pennsylvania from the alcohol business. The bill would auction off 1,250 newly created liquor store licenses to private owners. 

According to the report, hoarding by retail store managers left individual retail stores with swollen inventories in warehouses that could no longer support them. 

Wine and Spirit stores in the Scranton area had 606,383 cases of alcohol in 2010, up from the usual 300,000, according to the report. Likewise, Pittsburgh-area stores had 575,000 total cases over the typical 300,000 cases. Philadelphia also was overwhelmed with an excess 763,470 cases, though the report does not note how much inventory the region was supposed to receive. Retailers then began to procure additional warehouse space and began to rent non-temperature-controlled trailers to store the excess alcohol. 

The report said PLCB spent $500,000 renting trailers and hiring security guards to watch the inventory. The trailers could have damaged some merchandise, given that they were not temperature-controlled and some merchandise was temperature-sensitive. 

But there is no evidence that merchandise was damaged, Witalec said. 

Witalec said the trailers used for storage were the same type of trailers used to ship the merchandise. Furthermore, the PLCB said it did not see an increase in returns or consumer complaints.

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