Spokane7
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October 14, 2010 in Opinion
Editorial: I-1100 finds balance in privatizing liquor sales
Since the end of federal Prohibition, most states have gotten out of the business of selling booze, but Washington has not. We still have special state-run stores for “spirits,” which is alcohol that isn’t beer and wine. In pondering the two Washington state initiatives about hard liquor sales, it’s worth asking why the state wants control in the first place. The traditional response is to minimize the social costs of drinking. Without state controls, proponents say, underage drinking, drunken driving and other negative outcomes will increase.
But the data are inconclusive. The Common Wealth Foundation in 2009 compared “control” states such as ours with other states and concluded: “Evidence from 48 states over time shows no link between market controls and these social goals.”
The most compelling argument for the status quo is that state and local governments would lose revenue in very difficult budgetary times. That’s why you see police officers and firefighters campaigning against the two initiatives that would loosen the state’s grip. But even in good economic times, the Legislature hasn’t been able to wean itself from this revenue source.
Quite simply, it makes no sense for the state to be in the liquor business. But that doesn’t mean both initiatives should pass.
Initiative 1100 would end the state’s markup but retain the excise tax. It would close the state’s liquor stores and allow private businesses to take their place. It would also end the state’s control of distribution. As a result, competition would probably lower prices on all forms of alcohol. Initiative 1105 would end the markup and the excise tax but would require that purchases still be made from distribution centers, much to the delight of the handful of distributors. This would inhibit the competitive pressures that lower price. I-1105 does have a provision that directs lawmakers to devise a replacement tax. But if Initiative 1053 passes – and it’s doing quite well in polling – any new tax would have to garner two-thirds approval in both legislative houses. Barring that, I-1105 would cost the state an estimated $520 million a year. Under I-1100, the state would forgo $85 million. Local governments would also lose money.
These estimates do not include the increase in revenue from business and occupation taxes and license fees via the proliferation of private liquor operations. State Auditor Brian Sonntag has estimated that the state could raise as much as $277 million over five years. Municipalities with a B&0 tax would also see more money, but the city of Spokane does not have such a levy. Unquestionably, both measures would hurt tax collections for many local governments at a tough time. But other state and municipal governments have been able to get by without the extraordinary controls Washington state has placed on liquor sales.
The Legislature should have privatized liquor sales a long time ago. Voters cannot be blamed for doing it now. We recommend a vote for I-1100 and against I-1105.
To respond online, click on Opinion under the Topics menu at www.spokesman.com.
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liarsinnews on October 14 at 8:22 a.m.
I`m sick and tired of telephone calls from public officials who want to continue allowing the state to sell booze. My guess is Gregoire is responsible for these pests. Gregoire`s reckless spending habits might loose some of the hooch sales revenue and she might be forced to at least to stop some of it.
hawken on October 14 at 8:25 a.m.
Yes, yes and yes…. !
It’s absurd that Washington state government should be selling Jack Daniels Whiskey!! Absurd!
The vast majority of the states figured this out decades ago.
Smokie on October 14 at 4:44 p.m.
Spokesman-Review, you never fail to please. Let’s see, if there are private entities selling liquor, those entities will have to advertise against each other. Hey, there’s only one newspaper in Spokane, in which to advertise, what do you know? That’s us!
$$ ching ching $$.
Look, we know that it is tough these days in the newspaper biz. We know that you probably are on your last legs. We are sorry, but to seek out a few more gasps by blowing a hole in the state budget (a hole which you advocate against filling in every other editorial), and also to fuel your dying breaths with the blood of more kids killed in car wrecks, via more readily available liquor, is contemptible even for you. I suppose too that personal tragedy and fiscal ruin are great headline fodder as well.
Vote NO on 1100 and on every other initiative except the state income tax for millionaires. As the bumper sticker says. “It will piss the media off.”
Sarajane46th on October 14 at 9:02 p.m.
How can the SR acknowledge that Tim Eyeman’s initiative requiring a 2/3 vote to raise any tax or fee (or to repeal unearned corporate tax loopholes) and then in the same breath say that, “I-1105 would cost the state an estimated $520 million a year. Under I-1100, the state would forgo $85 million. Local governments would also lose money.” Double this to get the impact added to the $3.5 billion 2-year state deficit. Don’t ignore the costs to struggling local governments!
Losing this revenue will mean kicking thousands of kids off of Apple Health, thousands more adults off of Medicaid, closing parks and postponing adequate funding for schools. Until the SR can reconcile these and suggest alternative funding sources acceptable to the GOP, it is obligated to back off. You can’t possibly suggest that health care for needy families is less important than privatizing a business that works well now.
Nick42 on October 15 at 10:54 a.m.
Oh please, drop the “kids” argument. There is no evidence to suggest that privatizing liquor sales will harm “the kids.” In fact, California, a state where adults can buy alcohol like adults, has a lower underage drinking rate than Washington state:
http://oas.samhsa.gov/2k5State/AppC.htm#TabC-12
The fact is that the Democrats have had control of the legislature and the governor’s mansion for what seems like an eternity. For the past 2 years, they have had a supermajority in the legislature. During that time they have seen several bills aiming to modernize our liquor system and have refused to act.
Similarly, they have also refused to act when it comes to cleaning up our budget. Our budget situation this year is dire, but that is still no reason to vote against an initiative that makes sense. During the past two “supermajority” years, the democrats could have taken the high road and passed legislation that would have stabilized our state budget. It may have hurt them in the short term, but it would have been good for the state in the long run. Again, they chose to do nothing. Well, they chose to piece-meal a bunch of regressive taxes together and acted like that was the best they could do.
If I-1100 passes, the state budget will take a small hit, but that hit is one that can easily be patched up by a Democratic majority legislature and Democratic governor’s mansion. That is their job and it is high time they started doing it.
akastretch on October 19 at 8:57 p.m.
I will concede that selling liquor should not be a function of the state government and that the legislature has failed to do anything towards getting the government out of the business, but the reality is that it is a hugely profitable enterprise for the state and either of these two initiatives are a private industry grab for that profitable industry.
Under I-1100 the entire industry is deregulated, beer, wine and liquor. This measure does away with uniform pricing for every retailer, meaning the small guys pay more and big guys pay less, this hurts small business and creates a “pay to play” scenario whereby small wineries, small breweries and small distributors won’t be able to afford to compete. Credit terms are introduced (as opposed to current COD) for retailers, which will be difficult for the smaller suppliers and distributors to support financially and will lead to a lot of bad debt that will have to be accounted for in pricing models. Gifts and other support for retailers, currently precluded by law, will be allowed, bribes basically. This will concentrate the industry into the hands of the largest of the suppliers, distributors and retailers, which will be anti-competitive and put pricing power into the hands of those entities.
I-1105 is often criticized as being worse for the budget, but that is because the actions it calls for (which won’t be affected by the Tim Eyman measure) are not known, it actually mandates the state devise a tax structure on liquor to replace the revenue, and grow the revenue. It also allows for tighter and more effecient tax collection because the channels through which alcoholic beverages come into the state are tightly monitored and taxed, I-1100 could result in a lot of products being shipped into the state for which no excise tax is collected as products possibly move directly from out of state suppliers to in state retailer’s, too many transactions for the state to possibly monitor. The general attitude in the media is that I-1105 protects the distributors, truth is the big liquor distributors who already have operations in this state don’t need the protection, the suppliers will not circumvent them to sell direct to Costco because they might handle that suppliers’ products in 25 other states and the up and down the street business is too important for them not to use distributors, so those costs will remain. I-1105 does not directly change the way that wine and beer come to market, which makes it better for our local beer and wine industries.
Either of these measures passing will reduce the selection of wines in your grocery stores as retailers discontinue wine to make room for liquor, a lot of Washington wines will be on these discontinued lists, not a good thing for the billion dollar Washington Wine business. I-1100 will also be detrimental to the craft brewing industry, which is another strong Washington industry using locally grown ingredients, variety will go away as the huge brewers muscle everyone out. The hits to our local wine and beer producers will also hurt our tax base.
So, while most voters are being led to believe that this is about competition, convenience and choice, it is actually quite the opposite, it is about driving the small guys (producers, distributors and retailers) out of the business so that profits at large corporations can be maximized.
I think the system should be privatized, but not with either of these measures. So, I will be voting against both measures and hopefully force them to refine their approaches for next year. If both measures pass, then the legislature and courts will have to figure it out. If I-1105 passes and I-1100 doesn’t that will be alright, but not ideal, for the local industries and state budgets. The most catastrophic vote would be for I-1100 and against I-1105, precisely what the Spokesman Review recommended, but large retailer ad dollars probably play a role.
beachballer06 on November 03 at 2:31 p.m.
“Under I-1100 the entire industry is deregulated, beer, wine and liquor. This measure does away with uniform pricing for every retailer, meaning the small guys pay more and big guys pay less, this hurts small business and creates a “pay to play” scenario whereby small wineries, small breweries and small distributors won’t be able to afford to compete. Credit terms are introduced (as opposed to current COD) for retailers, which will be difficult for the smaller suppliers and distributors to support financially and will lead to a lot of bad debt that will have to be accounted for in pricing models. Gifts and other support for retailers, currently precluded by law, will be allowed, bribes basically. This will concentrate the industry into the hands of the largest of the suppliers, distributors and retailers, which will be anti-competitive and put pricing power into the hands of those entities.”
Sounds like capitalism to me.