August 17, 2011 in City

Mixed fiscal outlook on initiatives

Privatizing liquor sales has upside, agency says
By The Spokesman-Review
 

OLYMPIA – Washington would collect more revenue if an initiative to privatize liquor sales passes, but could pay more for road projects if another ballot measure on toll roads succeeds.

That’s the best estimate of the Office of Financial Management, which recently released its analyses of the three measures headed for the Nov. 8 ballot.

Initiative 1183, which would end the state’s monopoly on liquor distribution and retail sales, could increase state revenues between $216 million and $253 million over the next six years, depending on the “markup,” or increase, between the wholesale cost and the retail price. Local governments could see a total increase in revenue between $187 million and $227 million.

OFM also estimates that the total amount of liquor sales could go up by about 5 percent. That’s what happened in Alberta, Canada, when that province switched from government-owned stores to private stores. The number of stores selling liquor could more than quadruple, from the 328 state-operated stores now to 1,428 stores, the agency estimates.

As many as 184 wholesale distributors would take the place of the current state distribution system. The state would collect revenue from the licenses purchased by the store owners and distributors, and retailers would pay a percentage of sales.

The state currently controls liquor prices. Under I-1183, however, costs would be affected by competition among distributors and stores. “There is a wide range of potential impacts,” the OFM said.

Some impacts of Initiative 1125 also can’t be estimated, the agency said. But a requirement that the Legislature set all tolls on new bridges and tollways could make bonds for those projects “prohibitively expensive,” the agency says, repeating an earlier warning from the state treasurer.

For investors, having tolls set by an independent body instead of the Legislature is a “critical credit characteristic,” Treasurer James MacIntyre has said. Nowhere else in the country are bonds that are backed solely by toll revenue controlled by rates set in a legislature.

I-1125, sponsored by Tim Eyman and others in the Voters Want More Choices organization, would ban the use of variable tolls at different times or days.

Variable rates are already set for some West Side projects, such as the expanded State Route 520 Bridge, and planned for others, such as the Alaskan Way tunnel. If variable rates are prohibited, the ones that have already been set would have to be changed to a single rate in any future toll increase; those that haven’t been set would have to be changed to a single rate and a new cost analysis conducted.

A third initiative, which requires additional training and background checks for long-term-care workers, would cost the state an estimated $31 million over the next six years for added training, licensing and oversight, OFM said. But if I-1163 passes, the state could recoup about $18 million of that through matching federal funds.


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