May 7, 2009 in City
State imposes costly cure for budget hangover
52 percent markup on liquor will start Aug. 1
OLYMPIA – If you like liquor – particularly high-end stuff – buy it before August.
Washington’s liquor control board Wednesday voted to raise the state markup on liquor by an average of about $1 a liter, starting Aug. 1.
But instead of increasing all prices by a flat $1.05 a liter, the board decided to vary the increase by the wholesale price. A bottle of low-end Monarch vodka would rise from $9.95 to $10.75. But a large bottle of premium scotch would jump from $76.95 to $83.65.
The increase does not affect beer or wine.
Board staffers said state lawmakers forced the increase by stripping $80 million out of the state’s liquor revenue fund. The money was used to balance the rest of the state budget, which faced a multibillion-dollar shortfall. The increase will raise about $80 million over the next two years.
“It’s clear that the Legislature intended this,” said Brian Smith, a board spokesman. Without the money, he said, the state would have had to shut down its retail stores.
The board voted Wednesday to increase the state’s markup from about 39 percent over cost to nearly 52 percent.
An industry group representing distillers blasted the move, calling it a “stealth tax.”
Under voter-approved Initiative 960, it takes a two-thirds vote of lawmakers to raise taxes, unless voters approve the increase in a statewide vote. Distillers argued that it violated the spirit of the initiative for lawmakers to spend the money and force the board to raise its prices.
“It’s really the state Legislature. They’re the culprit in this,” said David Wojnar, vice president of the Distilled Spirits Council of the United States. “Now is not the time to raise prices or taxes.”
House budget writer Rep. Kelli Linville, D-Bellingham, said lawmakers had little choice.
“I don’t know what else we could have done,” she told the Tacoma News-Tribune. Budget writers transferred hundreds of millions of dollars from many similar accounts to balance the budget. “We didn’t just pick on them,” Linville said of the liquor board.
Wojnar said consumers will likely turn to lower-priced liquor.
“They’ll trade down,” he said, “and that’s never good.”