The following is a transcript of a report by Paul Van Osdol that first aired May 16, 2007, on WTAE Channel 4 Action News at 5 p.m.

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A Team 4 investigation found that despite what many people believe, dozens of state liquor stores are losing millions of dollars a year, which is costing taxpayers money.

The number of money-losing stores is increasing every year. The head of the Liquor Control Board said he's trying to close unprofitable stores, but sometimes politics prevents that from happening, which lends ammunition to critics who say the government should not be in the business of selling booze.

If you want to buy a bottle of wine Downtown, you have three options: a store in Oxford Center and two stores just blocks apart on Liberty Avenue.

There are plenty of choices for consumers, but choice comes at a cost.

The store at 959 Liberty Avenue was the third-biggest money-loser in the state last year with $61,000 in red ink.

But that's not the only example where the state LCB competes with itself.

The Stowe Township store lost $52,000 last year. There's another store less than half a mile away in Kennedy Township. A mile in the other direction, in McKees Rocks, is another state store.

But does it make sense to have three stores within a two-mile radius of each other?

"The simple answer would be probably not, but if I were to look at those stores, I would look at the demographics," said P.J. Stapleton of the LCB.

Team 4 found 75 state stores lost money last year, a 53 percent increase from just two years earlier when 49 stores ran in the red.

Other local money-losers were in West Deer, Wilkinsburg, Apollo, Aliquippa, Mount Oliver, Lower Burrell, Ford City, Brownsville, Masontown, Carmichaels, Point Marion and Punxsutawney.

A decade ago, as head of Price Waterhouse in Pittsburgh, James Stalder studied privatizing state stores.

WTAE Channel 4's Paul Van Osdol asked Stadler, "If you have stores that are consistent money-losers, what should the state be doing about that right now?

"As a businessman, I would say you would probably look to close them," said Stalder.

But state stores are businesses run by the government, so closing a store generates political heat.

"It's a difficult thing when you go into a community that is used to their state store, their liquor store, in their community," said Sen. Sean Logan. "They don't want it. It's like closing a neighborhood school."

That was the hurdle facing the LCB when it closed a store in Clairton last year. The community was losing population, the store was losing money, and there were three other stores nearby.

"A lot of people here, I believe, counted on that as a landmark," said Clariton resident Dawn Toboz. "It was easy for them to get to. They could walk. Now, they have to go to Glassport or some other nearby community to get to the liquor store."

The head of the LCB said he would run into even more heat if he tried to close the unprofitable store Downtown.

"If the mayor were standing here, he would say I need four stores in Downtown Pittsburgh," said Stapleton.

Overall, the LCB is profitable. But despite major changes in the past few years, including Sunday sales and better selection, profits are down. Statewide, profits have fallen from $135 million to $129 million the past three years, a 4 percent drop.

In Allegheny County, store profits are down 20 percent in the same period from $18.2 million to $14.6 million.

"It's a continuing problem, but it's a process we look at constantly," said Stapleton.

Stapleton, who took over the LCB in January, said he is committed to cutting costs and increasing profits.

"We'll be much more prudent in how we choose locations, in how we choose hours and how we choose the staffing of those stores," said Stapleton.

Still, several experts told a state Senate committee recently the only way to solve the problem of unprofitable stores is to sell off all the state stores to private business. That would also be a windfall for the state with $1.4 billion in new money.

"The fundamental core question is should the government be in a business that's providing a consumer good?" said Stalder. "This is not normal business."

So, how unusual is this business?

The LCB spends millions of dollars a year promoting the sale of alcohol, and it also spends millions trying to prevent the sale of alcohol to minors.

While there's plenty of talk in Harrisburg about privatizing the turnpike, there is little effort to privatize the state stores. That's because of an unusual alliance between Democrats, who want to keep union jobs in the stores and Republicans, who want to keep tight control on liquor sales.

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