Price for wholesale liquor sales elusive

OLYMPIA – Washington officials are trying to come up with a way to decide whether it makes good economic sense to let someone else run wholesale liquor operations in the state.

About the time they’re ready to make that decision, the voters might take it out of their hands and turn all liquor operations – wholesale, distribution and retail sales – over to private businesses.

But if voters reject Initiative 1183 in November, the state could still turn its warehousing and distribution system over to the highest bidder next year. Then the question becomes, how do state officials decide the best deal for the state?

A special committee formed by the Legislature wrestled with a way to answer that question Tuesday as it tried to come up with suggestions for state officials drafting specifications for a bid, known as a request for proposal or RFP, and ranking any that come in.

“We do RFPs to generate some sort of outside-the-box thinking,” Marty Brown, director of the Office of Financial Management, told the committee. “We always, unfortunately, score them inside the box.”

Ultimately, it comes down to who would bring the state more revenue than the current system, state Sen. Joe Zarelli, R-Ridgefield, said. But bidders shouldn’t be able to assume an unexpected jump in sales or any changes to the system, like a new statute or higher taxes, that would have to be approved by the Legislature or the Liquor Control Board, he added.

“Can they make the system more efficient without selling more liquor?” Zarelli said.

State Rep. Ross Hunter, D-Medina, the committee chairman, agreed: “Counting on the Legislature to do something doesn’t sound like a good bet right now.”

Brown said he has no idea how many companies will submit bids or whether any will be acceptable. If an acceptable bid is submitted, the state would begin negotiating with the company Nov. 1, one week before voters decide whether to accept I-1183.

Two initiatives to take the state out of the liquor business failed last year. This year’s initiative campaign is shaping up to be another multimillion-dollar fight. Costco has donated more than $2 million of a nearly $2.5 million campaign thus far to get the initiative on the ballot and passed. Wine and Spirits Wholesalers of America Inc., a national trade organization, has contributed $3.6 million of the $3.9 million collected so far for the “No” campaign.

State Rep. Cary Condotta, R-East Wenatchee, said he was concerned about beginning contract negotiations so close to the election: “The timing looks suspect, whether it is or not.”

But the timing is in the statute, outside the control of the committee or OFM, which would negotiate the contract, Zarelli said.

I-1183 was filed after the law was passed and the Legislature adjourned.

If the initiative passes, the statute setting up the bidding process and the committee likely would become moot, and the committee wouldn’t continue with negotiations, Hunter said.