Costco-backed I-1183 aims to remove state from liquor business

September 20, 2011

By Warren Kagarise

Months after a measure to privatize the state’s Prohibition-era liquor system failed, Issaquah-based Costco ordered another round, and spearheaded a similar measure for the November ballot.

Initiative 1183 aims to remove the state from the business of distributing and selling hard liquor. The measure is less comprehensive than Initiative 1100, a Costco-backed privatization measure rejected last November.

A colorful brand of Puerto Rican rum occupies a shelf at the state liquor store on Northwest Gilman Boulevard. By Greg Farrar

If passed, I-1183 calls for state-run liquor stores to close by June 2012. The measure also aims to require the state to license private enterprises to sell and distribute hard liquor, set license fees based on sales and regulate licensees.

Unlike the unsuccessful initiative from last year, I-1183 limits hard liquor sales to stores of at least 10,000 square feet. (The average Costco encompasses about 140,000 square feet.) I-1100 aimed to allow smaller retailers, such as gas stations and convenience stores, to sell hard liquor.

Still, opponents said safety concerns remain about efforts to privatize the system and sell booze at more locations.

“One thing that became clear is that voters of the state of Washington really didn’t want to have a huge increase in the amount of outlets selling liquor — and that’s exactly what this would do,” said Alex Fryer, a spokesman for Protect Our Communities, the campaign opposed to I-1183.

Costco — alongside other large retailers, including Safeway and Trader Joe’s — serves as a major backer for the initiative. Protect Our Communities receives important support from the Wine & Spirits Wholesalers of America.

The forces for and against I-1183 raised about $9 million combined so far, and more money is guaranteed to pour in before Election Day, Nov. 8.

Kathryn Stenger, Yes on 1183 spokeswoman, said support from familiar retailers bolsters support for the measure among the electorate.

“On the one hand, people love the idea because they already have a good relationship with Costco and being able to go in there and find their favorite brands, but it’s also given them some peace of mind,” she said. “They know that Costco is selling beer and wine now, they know that Costco sells liquor in other states and has done so safely.”

State ballot initiatives

Though initiatives 1125 (highway tolling) and 1183 (liquor privatization) receive the most attention, Washington voters must decide other important issues on the Nov. 8 ballot.

  • Initiative 1163 aims to require training and background checks for employees in adult family homes. Washington voters passed a similar measure, Initiative 1029, in 2008, but the measure withered in the Legislature due to budget shortfalls.
  • Senate Joint Resolution 8205 calls for amending the state Constitution to remove a long-unused provision about the length of time a voter must reside in the state to vote for president and vice president.
  • Senate Joint Resolution 8206 is a proposed constitutional amendment on the budget stabilization account maintained in the state treasury. The measure calls for legislators to transfer money to a budget stabilization account if the state receives revenue related to “extraordinary revenue growth.”

Measure differs from past initiatives

The state estimates liquor privatization resulting from I-1183 could generate $216 million to $253 million for state coffers in the next six years. The state could also pocket about $28 million from the liquor distribution center sale.

The measure also includes fees to generate revenue for local governments. Many local government officials across Washington raised concerns last year about possible financial losses related to liquor privatization. Issaquah City Council members considered a property tax increase last year before voters defeated I-1100 as a possible route to compensate for lost revenue.

Issaquah received $363,674 from state liquor revenues in the most recent fiscal year.

The state estimates local governments could receive $186 million to $227 million in the next six years if I-1183 passes.

I-1183 is the latest effort in a long series of proposals to change Prohibition-era liquor laws. The state maintains a government-only monopoly on retail and wholesale liquor sales. Washington and 17 other states control liquor sales and distribution.

“What we’ve heard anecdotally from people across the state is, it’s not that they’re uncomfortable with taking the state out of that monopoly, it’s that they wanted a little more peace of mind about where liquor would be sold,” Stenger said.

I-1183 opponents said the defeat of dueling liquor-privatization measures last November offered a clear message.

“The message that we received was clear from voters that they just didn’t want it,” Fryer said. “Whatever problems or complaints people may have with state liquor stores, they were outweighed by concerns.”

Stenger said the presence of initiatives 1100 and 1105 left voters uncertain about possible outcomes.

“As a voter, having two initiatives on there that dealt with it, but in different ways, made for a lot of confusion,” she said.

In the latest round, however, Fryer said voters tired of liquor privatization initiatives could sink I-1183.

“One of the biggest things we’re hearing from voters is, ‘This again?’ It’s the third time in 12 months,” he said. “Of all the things that are going on in people’s lives, with the economy and the housing market the way it is, privatizing liquor just seems off-key.”

Warren Kagarise: 392-6434, ext. 234, or wkagarise@isspress.com. Comment at www.issaquahpress.com.

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Comments

11 Responses to “Costco-backed I-1183 aims to remove state from liquor business”

  1. Gvt. Control on September 21st, 2011 8:11 am

    Why would local government officials raise property taxes to compensate for lost liquor revenue? Every local Safeway, Trader Joe’s, Costco, etc. would be paying the sales tax to each city rather than being filtered through the state first. Sounds like a lot of unjustified scare tactics.

  2. Burt Pierce on September 21st, 2011 12:06 pm

    Washington state is in bad financial shape, mostly because it’s citizens are unreasonable about taxes.

    1) if this goes through, how will state revenues be replaced?
    2) what happens to employees? Most of them are career people over 50?

  3. erik on September 21st, 2011 8:04 pm

    “Washington state is in bad financial shape, mostly because it’s citizens are unreasonable about taxes.”

    Not entirely. Washington State is in bad financial shape because we have people and government that can’t keep within their own budget.

  4. Jam on September 22nd, 2011 9:17 am

    Some people are just sheep! Yes, the taxes will continue to fill the general fund. The PROFITS however, will not! Also, I-1183 will institute a NEW 27% tax on booze…still think it will be cheaper? When the state has to cough up more $$$ for all the unemployed workers, still a good idea? AND folks, there is a loop hole that ALLOWS gas stations and convenience stores to sell booze….it’s a bad idea. The State Monopoly on LIQUOR should be sold. It’s worth around $900 million. And we should just hand it over to Costco? DUMB

  5. Karen Shiveley on September 22nd, 2011 10:47 am

    What everyone seems to be missing is that people don’t want to have to go to a liquor STORE! Time, the price of gas, inconvenience, did I say Time?
    What kind of knuckle-headed state has monopolies on L&I and alcohol, free of no competition from private enterprise in a free enterprise system?!?
    The state needs to be out of the business of selling liquor. Period.
    If this ballot isn’t perfect, we can fix it if we don’t like it. I say act now.

  6. G is me on September 25th, 2011 10:14 am

    If it gets more money to Oly, maybe they won’t have to dream up as many other ways to tax us.

    “Washington state is in bad financial shape, mostly because it’s citizens are unreasonable about taxes.”

    ^ This statement is a joke. All government is in bad financial shape due to the economy and years of government waste. Ideal time to cut government wayyyy back to a level that is affordable.

    27% tax increase on booze? I could care less, don’t drink the poison.

  7. Jane M Lawson on September 30th, 2011 6:24 pm

    The state should be able to save quite a bit of money if I-1183 passes. The cost of employees, employee health insurance and pensions, distribution center and operation of individual state-owned liquor stores will disappear. The state will save additional money which has been spent for utilities to operate its facilities. Whether or not you consume alcoholic beverages, this should be good news.

    Conversely, the state will continue to have revenue from the sale of liquor through taxation, licensing fees, and the sale of the distribution center and the current state-owned liquor stores.

    I-1183 specifically limits the size of stores which will be able to sell liquor to 10,000 square feet or more. How many mini-marts and gas stations do you know that are that large?

    If the initiative passes, the current state employees who have achieved permanent status (employment for life), will likely be absorbed by other state agencies.

    The Washington Liquor Control Board has kindly created a document entitled, “Where Your Liquor Dollars Go…) It’s an interesting read which can be accessed by visiting the web site http://www.liq.wa.gov. It should clarify some of the questions regarding expenses related to the state liquor monopoly.

  8. Jenelle Anderson on October 13th, 2011 3:32 pm

    Here’s the new/changed text of the referendum (detailing affected WACs) http://www.sos.wa.gov/elections/initiatives/text/i1183.pdf

    The referendum shows the already-in-place multiple taxes per liter and per sales price.

    Am I wrong in believing that existing liquor stores will be auctioned off…not closed? The auction will include the current state owned distribution warehouses (and it seems the 10,000 square footage limit is revoked by subsequent articles). So how much “lobbying” over this referendum is pitting COSTCO against the Washington Beer and Wine Wholesalers Association? What about how this referendum will affect the rest of us…public, police, emergency crew, hospitals?

    Public television is airing a program about prohibition, which led to unprecedented criminal activity throughout the country. It would be nice to know how prohibition affected our state laws.

    If the bill leads to ADDITIONAL outlets for spirits, it may be logical that the sales in existing stores may or will drop.

    I do not see a change in the store hours, or “legal hours for selling liquor” …so, my question is whether the WSLCB will simply close down their retail and warehouse operations, but will remain a viable administrator of licensing and taxable income.

    Here’s a summary of alcohol laws by state (though it does not show changes over time).

    http://en.wikipedia.org/wiki/List_of_alcohol_laws_of_the_United_States_by_state

    I don’t know where to find the alcohol laws for Indian reservations. I only know that the local reservation land shows a hundredfold increase in the little white crosses along the roadways where alcohol-related collisions have has resulted in deaths of drivers, passengers, and/or pedestrians/cyclists.

  9. Jenelle Anderson on October 13th, 2011 3:50 pm

    Based on evidence, the Center for Disease Control task force for alcohol (abuse) recommends the following interventions to prevent excessive alcohol use and related harms:

    Increasing alcohol taxes.

    Regulation of alcohol outlet density, which is the number of places that sell alcohol in a defined geographic area.

    Dram shop liability (i.e., holding retailers accountable for harms resulting from illegally serving or selling alcohol)

    Maintaining limits on the days and hours when alcohol can be sold.

    Enhanced enforcement of laws that prohibit alcohol sales to minors.

  10. brew stiller on October 25th, 2011 9:14 am

    To me, the tenets of free market capitalism trump all other issues. All monopolies should be abolished and no business should be owned or operated by the government.

  11. Tom on October 31st, 2011 11:51 pm

    I am opposed to the State of Washington or ANY other state selling liquor yet have strict laws & enforcing them against driving drunk, seems a clear conflict of interest. BUT what is MOST revolting to me is that Costco could/would spent their ENTIRE PROFITS to buy this election, $22,000,000.00 is a drop in the bucket for Costco. What are they going to spend next time? $200,000,000.00? With the way the laws are these days the skies the limit what a large corporation can spend on ANY given election, this is the CORE issue that OWS is all about. So for me, I’m between a rock and a hard spot, NO I don’t want to see Washington being involved in liquor sales,,,AND NO I hate the fact that Costco can be SO BLATANTLY arrogant in spending this much on an election.

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