December 3, 2011 in Idaho

Idaho may lose some liquor sales

New state outlets in Post Falls, Oldtown on hold after Washington election
By The Spokesman-Review
 
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With Washington gearing up to privatize its liquor sales, Idaho state officials are worried about losing sales at their long-popular, state-run liquor stores along the border. They’ve tabled plans for new state liquor stores in Oldtown and Post Falls.
(Full-size photo)

BOISE – With Washington gearing up to privatize its liquor sales by June, Idaho state officials are worried about losing sales at their state-run liquor stores along the Washington-Idaho border and have tabled plans for new state liquor stores in Oldtown and Post Falls.

”I think we will continue to remain competitive,” said Idaho State Liquor Division Director Jeff Anderson, “but we really don’t know.” Last year, Idaho’s liquor division distributed $50 million in profits to the state’s general fund, cities, counties and courts.

For now, Anderson said, Idaho won’t add any new stores, and will instead try to “get more out of the stores we have.”

At least 13 of Idaho’s state liquor stores are within 15 miles of the Idaho-Washington border, according to researchers at the state’s Office of Performance Evaluations, which has been raising something of an alarm about the pending change.

“They account for 23 percent of the sales in the state,” researcher Jared Tatro told Idaho lawmakers this week. That’s “$34 million in sales, $13 million in profits last year alone.” If sales at those stores drop by just 10 percent next year, Idaho could lose $3.3 million in profits, he warned.

Sen. Jim Hammond, R-Coeur d’Alene, said he’s heard Post Falls stores sell the most liquor in the state. “I’m sure it’s because of the sales to Washingtonians,” he said.

Tatro said Idaho’s liquor prices currently are lower than Washington’s, with pricing differences as high as $84 for a 12-bottle case. “Therefore we were finding Washington residents were coming across the border, primarily to Post Falls, Oldtown, Moscow, Lewiston, and they were buying the product here.”

The Office of Performance Evaluations released a report last winter showing that Idaho could make just as much or more money by privatizing its state liquor sales, but state officials responded unenthusiastically, saying they favor keeping state control over liquor sales. Idaho’s state constitution requires the state Legislature to promote “temperance” and “sobriety.”

Hammond, who said he personally supports privatization, said Idaho’s leadership includes “folks who really don’t support drinking anyway and see this as a way to limit consumption.”

Rakesh Mohan, director of the office that produced the report, said his office takes no position on privatization, but examined Idaho’s liquor operations to identify how the state can maintain its revenue and keep administrative costs low.

That report found that Idaho’s liquor division, which now has 66 state-operated liquor stores plus an additional 96 outlets run by contractors like grocery stores, could save $700,000 a year by converting 13 of its existing state-run stores to contract outlets.

Anderson said the division is reviewing that issue and is considering whether to convert a state store in Weiser into a contract store. The agency decided against closing the Orofino state liquor store in favor of a contract outlet. There, he said, “We determined that converting … was not in the state’s interest, due to the high probability of diminished customer service, lost sales, and the loss of state control for temperance purposes.”

The division had been looking into a new state liquor store at Oldtown, where a contract outlet at the Family Foods store does a brisk business, and adding a third state store in Post Falls, but Anderson said those plans are now on hold.

Anderson said he’s not convinced that prices in Washington will fall below Idaho’s, because even after privatization Washington still will have high state liquor taxes. Large stores like Costco in Washington likely will carry a limited number of products for low prices, Anderson said, adding that Idaho state stores, as a monopoly, typically carry a wider array of products, including value brands that are popular at border stores.

“We’re going to have to see what happens,” he said. “We have a very interesting product that we sell to the public, and lots of people have different opinions as to how available it should be.”


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