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I-1183 the second attempt to shift liquor sales to Costco, other private retailers

Supporters say the initiative has been reworked to resolve voters' concerns, but opponents say it still has safety issues.

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By Jerry Cornfield
Herald Writer
Published:
OLYMPIA -- Is this the year the state gets out the liquor sales business for good?
Costco is investing millions of dollars to hasten the government's exit while a phalanx of beer, wine and liquor distributors is spending nearly as much to keep it in.
Voters will decide Nov. 8 when they finish casting ballots on Initiative 1183 which calls for the state to shut down its liquor stores and warehouse, sell off the stock and let private retailers take over.
If this all sounds vaguely familiar, it should. A year ago the same parties faced off on the same question with Costco-backed Initiative 1100 and voters answered with a resounding "no."
"In the intervening 11 months, no one said we want a do-over," said Alex Fryer, spokesman for the coalition opposing the measure. "It's because one company, Costco, wants it. They're not in the business of making public policy. They're in the business of making money. They will do so under 1183."
Supporters said while they are pushing the same goal to end the state's monopoly on distributing and selling distilled spirits, there are major differences in how they want to reach it.
Learning from last year's defeat, Initiative 1183 was written to resolve concerns expressed by voters. It aims to bar the sale of booze at most mini-marts and convenience stores; prevent cities, counties and the state from losing revenue in the deal; and impose stiffer penalties on retailers who sell to minors.
"This is a much better written and more comprehensive bill," said Diane Symms, owner of Lombardi's restaurant near Everett.

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Washington is one of 18 control states and one of 13 involved in retail sales of liquor. Forces opposed to this government monopoly have repeatedly tried to do away with it in the past 70 years without success.
Today, the state sets all the rules from the hours of operation to the price of the products, including a mark-up of 51.9 percent. It decides what products will be sold in the state and tells restaurateurs such as Symms what days they can make purchases for their business.
Under Initiative 1183, all that would change.
It wipes out the state's power to control prices while letting retailers make deals directly with wholesalers. It axes the mark-up but leaves in the taxes, and imposes new fees on retailers and distributors in hopes of avoiding any loss in revenue to the coffers of state and local government.
The measure directs the state to close the 166 stores it owns as well as its liquor warehouse by June 2012 and sell all the stock. It allows those stores to be re-opened under private ownership. And the 162 existing contract liquor stores are grandfathered in under the measure.
Other changes include allowing wineries to distribute directly to retailers and eliminating the requirement that wine makers sell their bottles at a set price.
One of the most debated elements centers on exactly how convenient it will be to buy a pint if it passes.
Last year, under Initiative 1100, bottles of bourbon and other distilled spirits could have been sold wherever beer and wine were available. That added up to roughly 5,000 places including convenience stores and mini-marts.
Initiative 1183 tries to get that number way down. It requires retailers have at least 10,000 square feet to be eligible for a license. Proponents say this ensures mini-marts are out and only larger grocers and the big-box stores such as Costco and Wal-Mart will qualify.
But opponents say that's not true. The measure allows the state Liquor Control Board to grant a license to a convenience store in an area which has no large retailer. Wording is loose enough where it could bring liquor into small stores in a more urban area where there's major markets.
The state Office of Financial Management estimates as many as 1,428 places will wind up with licenses including the 328 state-owned and contract liquor stores. The state-owned stores likely will be sold to private business owners. It doesn't try to predict how many conveniences markets in rural areas will seek an exemption.
"Whether it will be 1,000 of them or 500 of them, it will be sold in convenience stores and mini-marts," said John Guadnola, a Tacoma attorney and spokesman for the Washington Beer & Wine Wholesalers Association, which opposes the measure.
Opponents are warning voters their communities could be less safe if hard liquor becomes more readily available. They talk of an increase in alcohol-fueled accidents and violence as well as a spike in teen drinking.
"Will more teenagers get their hands on liquor? I think that's inevitable," Fryer said.
Kathryn Stenger, spokeswoman for the Yes on 1183 campaign, said the initiative doubles penalties for those cited for selling to minors. And she said if more revenue is generated, as expected, lawmakers will almost certainly spend it to prevent any increase in illegal sales.
"That should give voters greater peace of mind," she said.
And Stenger doubts public safety is the real motive for the Wine and Spirits Wholesalers of America donating nearly $6 million to the opposition campaign. The group prefers a privatization model in which the state continues to sell booze and their members are the ones allowed to distribute it, she said.
"They don't care about protecting our communities," she said. "They care about protecting their profits."
Initiative proponents are careful not to promise lower prices -- for drinks, bottles or fifths. They figure it will happen when competition is unleashed
"I cannot believe that private industry won't sell liquor more competitively," she said.
Lower prices won't cause consumption to soar, Symms said.
"Do I think that if we reduce the cost people will go out and get hammered? I don't think that," she said. "I just don't see how it will increase the amount of alcohol people drink. I don't believe there is going to be any more problems with alcohol."
Guadnola said if you add up the claims of proponents, it's too good to be true.
They claim more selection, more convenience, lower prices and the state will get more money without any increased risk to the public's safety, he said.
"I don't see all that happening," he said.

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Last year, some of the loudest voices against Initiative 1100 came from cities and counties worried their share of liquor revenue would be wiped out. This year, many of those same voices are silent or at least a lot less vehement in their views.
The reason is Initiative 1183 could potentially deliver them even more money than now comes in.
In the fiscal year that ended June 30, the state Liquor Control Board distributed $6.7 million to Snohomish County and communities in it. The state Office of Financial Management estimates passage of Initiative 1183 could increase the amount by $3.1 million or more a year for the next six years.
As for the state, there's a one-time pick up of $28.4 million from the sale of the state liquor distribution center
OFM analysts estimate the state could gain between $216 million and $253 million in new revenue each year. But they caution those figures assume prices drop a little, consumption increases by 5 percent and the amount of fees makes up for the loss of the mark-up.

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With roughly three weeks to go, this year's bruising battle is shaping up to be much more expensive than a year ago.
Collectively, the two sides had raised $18.6 million as of last week -- $4 million more than the entire 2010 campaign.
Costco is in for roughly $11 million in cash and in-kind contributions, according to online records of the state Public Disclosure Commission. That's out of a total of $11.2 million raised by the Yes on 1183 forces.
Wine and Spirits Wholesalers of America is the leading check writer for the opposition campaign with contributions totaling $5.8 million to the Protect Our Communities coalition.
All that money is going to an endless string of television commercials and mailings to voters statewide. A year ago only four counties – Island, Douglas, Kitsap and Mason -- gave Initiative 1100 a majority vote.
Costco is banking on having a better product this year while opponents think voters will find the updated version isn't improved enough to change their minds.
Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com


Learn more
More information from opposing campaigns can be found online:
Yes on 1183: http://yeson1183.com/
No on 1183: http://protectourcommunities.com/

What it does:
Initiative 1183 would:
•Close state liquor stores and sell their assets, grandfather in existing contract stores;
Close the state liquor warehouse and sell its stock and repeal a 2011 law directing the state to solicit bidsto lease the state liquor distribution facilities to a private party;
License private retailers to sell and distribute spirits and levy fees on them fees based on sales
Allow wineries to distribute directly to retailers and eliminates the requirement that distributors and manufacturers of wine sell their product at a uniform price;
Limit sales to stores with at least 10,000 square feet of retail space, although allowances can be made by the state Liquor Control Board for neighborhoods in which there is no large retailer.
Doubles fines on retailers for illegal sales of distilled spirits.
Story tags » RetailWineState politicsPolitical AdvertisingState electionsTaxesAlcohol

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