I scheduled this interview with Jonathan Newman, Chairman of the Pennsylvania Liquor Control Board (“PLCB”), weeks before the controversy erupted surrounding the rushed creation of the PLCB’s CEO position and former Senator Joe Conti’s appointment to that post. I had planned to fill our half hour discussion on December 20, 2006 almost entirely with the type of in-depth questions only a wine geek would ask, but the politics of the day could not be ignored and Chairman Newman graciously obliged.
In his first-ever interview in the blogosphere, Chairman Newman talks candidly and passionately about his principled opposition to the CEO post, the shadow it casts over the continued viability of the initiatives he spearheaded, such as the Chairman’s Selection program, and whether he will remain with the PLCB in light of Conti’s appointment. Chairman Newman also shares his thoughts on the infamous Johnstown Flood Tax, whether it is still illegal to ship wine into Pennsylvania, and what the Pennsylvania legislature should do on the issue of direct shipment. And before the interview is over, he may even have a wine recommendation or two.
Chairman Newman, welcome to PhilaFoodie. Thank you for taking the time out of your busy schedule to talk with me.
It’s my pleasure.
I know that you conducted an online chat on the eGullet bulletin board back in the day, but have you ever been interviewed on any blogs?
I have a lot of respect for blogs. I think blogs have transformed the atmosphere of communications in Pennsylvania. This is actually the first such time I’ve participated in an interview in this format, so glad to do it with you for the first time.
I’m honored, Chairman. Thank you. Before we talk about wine, I’d like to talk a little about the PLCB’s newly created CEO post that made the news last week. The PLCB voted 2 to 1 to appoint former Republican State Senator Joe Conti as the CEO of the PLCB. You opposed the appointment and expressed some strong comments about it. Why?
It was a bad day for good government in Pennsylvania. I believe in public comment and a chance for media scrutiny. There was no transparency in state government. This was a decision that was a fait accompli by the time the information was given to me. I was given the name on Monday afternoon. I was given the job description and salary amount Tuesday afternoon at 3:00 o’clock and was supposed to rubber stamp it at 10:00 a.m. on a Wednesday board meeting. I felt that, given the dynamics of the Pennsylvania Liquor Control Board, if it was appropriate to search for a CEO, a COO, or a CFO, there should have been an RFP [request for proposal], we should have hired the best consultant to see if this was well-advised. And then if it did make sense, we should have truly done a national search and found the best individual. It was a bad day for state government, and at the end of the day integrity and character mean a lot to me and I felt very strongly that this was a bad move for the PLCB and a big negative for the commonwealth of Pennsylvania. And the reason I have been at the PLCB for 7½ years, and Chairman for 4½ years, is I believe in good government, I like my job, I work hard, I feel like I’m making a difference in people’s lives. The board powers that are mandated are statutory. Board members are meant to work full-time. I put in 60, 70 hour weeks and put my heart and soul into this job and feel like I’m making a difference for Pennsylvania consumers. And I object to the process and the way this was done.
Why do you think the Governor’s office rushed this appointment?
I don’t know. I can’t guess what the intent of others would be. I certainly have read op-eds throughout Pennsylvania. Every editorial board of every newspaper in the Commonwealth is outraged. It’s been covered extensively on radio, and I know that the public is outraged by what happened. And I’m obviously disappointed that this is what it came down to. But in order to understand the Governor’s intent and what his thinking would be, you’d probably have to ask him or his administration.
Certainly, the process was not done well. The PLCB has had record profits. Our numbers are extremely impressive, and I’m proud at the kind of returns we’ve delivered for the Commonwealth. In fact, on a press release approved by the Governor’s office, dated July 10, 2006, Pennsylvania Liquor Control Board announces record sales performance. Last year for our fiscal year that ended in June, for 05/06, we contributed $80 million in profits to the Commonwealth, $315 million in taxes, $18.5 million to the Pennsylvania State Police, for enforcement, $2 million to the Department of Health for drug and alcohol programs and $4.5 million in licensing fees, returning $420 million. Board member Tom Goldsmith is quoted as saying “the PLCB’s strong sales performance benefits all Pennsylvanians.” During the past fiscal year the PLCB will have contributed more than $420 million to the Commonwealth, bringing the total to more than $1.5 billion for the past four years. Expenses have been consistent. For the upcoming year, we’ve kept our expenses very consistent. The only expenses that have changed have been those negotiated by the Commonwealth, which include the licensing discount, which was legislative and signed by the Governor, and wage and other retirement benefits. So, we’ve watched our expenses very carefully. We’re opening big, beautiful Premium Collection Stores, our sales numbers have shown record growth, and I’m proud of our accomplishments. So, as far as intent, I’d be real curious as to what the answer is.
Does the PLCB really need a CEO?
Well, I wrote the Governor a memo in October of 2005 when I first heard the discussion of whether the PLCB needs a CEO, and it was right after the legislative pay raise fiasco. And I thought it would not be consistent with government to bring in a CEO at a big salary because, first of all, it’s statutorily mandated that such a position does not exist and has not existed since 1933 with the inception of the Board. And I have, for my $65,000 salary, put, as I said, my heart and soul into it. And I have been clear to the Governor and, David, I want to be clear to you. I have said to the Governor every step of the way, written it down, and said it to his administration: I do not want a dime more, I am doing the job that I love, the salary is not an issue to me, I absolutely don’t want anything more. That has been very well documented because I felt like I was doing some good and taking the PLCB to the next level, through all my marketing initiatives, because I care, because I was making a difference.
If the position was warranted, there should have been a national search firm brought in to have a competitive RFP to make sure we get the best consultant to see (a) if it’s warranted; (b) if it’s warranted, then you do a national search and you find out the best candidate who’s out there. That’s transparency in government. Not being given the name on Monday, an amount of money and a job description on Tuesday and expected to rubber-stamp it on Wednesday. So, I don’t know that it was necessarily needed, but if a professional was brought in and they made recommendations, certainly the Board should have been consulted during the course of such a process. Such a process did not occur.
The Philadelphia Inquirer reported that Governor Rendell was surprised and saddened by your opposition, and the paper also speculated that Rendell might strip you of your chairmanship of the three-member board. Do you think that’s true and have you spoken to Rendell since then?
I have not spoken to Governor Rendell since then. When we had our conversation on Monday, I said: Governor, I have some concerns, we need to sit down and talk about this. I would become a paper tiger and not be able to get the accomplishments that I’ve done going forward. And he said: no problem, he would put it together. I had a 3 o’clock meeting with Joe Conti, and Secretary [Joseph] Martz from OA [Pennsylvania’s Office of Administration]. I expressed to them in no uncertain terms why I would oppose this and I felt uncomfortable about it. And they knew based on that meeting that I did not have a comfort level in the process that was happening.
The two ways this is being spun is that there are declining profits, and that is far from the case. I can certainly forward to you our balance sheet. We have been a cash cow for the Commonwealth. And the other [way it is being spun is] to say that I wanted this position. I was doing the job required of this and never wanted a dime more from this. It was my love of making Pennsylvania a better wine culture, of delivering value for wine customers, of making sure I looked out for the consumer in advocating direct shipping, Sunday sales, opening our stores on holidays, tastings at stores, being able to sell accessories. So, I am saddened to see the weak response due to my indignation of the process and the way this was approached. I am hoping that the process will be reversed and they will come to their senses and realize this is a bad idea.
Senator John Rafferty, Chairman of the Law and Justice Committee, is planning, so far, on conducting hearings at the end of January. Both he, Representative [Ron] Raymond and Representative [Robert] Donatucci, the Republican and Democratic Chairs of the House Liquor Control Committee, are concerned about the process. The questions are: Is it appropriate to take a Board that has statutorily-mandated responsibilities and to have the Board abrogate those responsibilities to a person, giving them day-to-day control over all the responsibilities? Is it remedied by simply saying that that person reports to the Board? If you do something like this to the Liquor Control Board, could you do it to the PUC, to the Turnpike Commission? Could you bring in people at the