November 1, 2011 in City

The battle over booze

Truth and rhetoric don’t always track in campaigns on liquor privatization
By The Spokesman-Review
 

The multimillion- dollar fight over state-run liquor sales is flooding the airwaves and stuffing mailboxes across the state as both sides in the Initiative 1183 debate try to empty their deep pockets.

The fight started months ago with dueling police and firefighters who love or hate the ballot measure. It grew into an argument over whether mini-marts would become magnets for teen drinkers and recently added a dispute over who’s trying to subvert democracy by “buying” the election.

Considering the campaigns have already broken records for contributions for and against an initiative, the last seems a bit like pots and kettles arguing over their respective blackness.

Here’s a look at some of the campaign rhetoric:

More stores selling liquor

There will be more, but exactly how many more is unclear. The Office of Financial Management’s fiscal analysis estimates the current number of stores will grow about fourfold, from 328 to 1,428. The agency arrived at that figure after studying other jurisdictions that have ended government monopolies on liquor sales and considering the number of retailers like Costco and supermarkets in the state, plus the number of “contract” liquor stores in small communities.

Opponents claim it will grow much more, and have a map that suggests almost every mini-mart in the state could sell liquor. That’s a huge stretch because the State Liquor Control Board, which would be in charge of issuing licenses to retailers, would have to determine there’s no other store in their “trade area” selling liquor.

Supporters say the initiative exempts mini-marts, but it doesn’t specifically do that. It says a store must have at least 10,000 square feet, but if there’s no store that big in a trade area that has a license, the Liquor Board could issue a license to a smaller store.

More sales to minors

Campaign images of teens buying liquor in a mini-mart and hopping into a waiting car may have helped kill two liquor initiatives last year. Opponents have tried to capture that again by noting the exemption for smaller stores and suggesting they’re the most likely to sell to underage drinkers.

This is a problem on two counts. First, many convenience stores already sell beer and wine, so those types of illegal sales are already possible. Second, if a mini-mart does obtain a license to sell liquor, employees would have to undergo new, more rigorous training, just like the big stores.

Lower or higher liquor prices?

In some campaign literature, supporters contend ending the state monopoly on wholesale and retail liquor sales will lower liquor prices. That could happen through competition, but is not mandated by the initiative. It also means that large chain stores could undercut individual retailers.

Opponents contend consumers will be hit with a new 27 percent tax on liquor, which is true, but ignores some of the mechanics of the new system the initiative would set up. I-1183 removes the current state markup on liquor, replacing that cost to consumers with a series of new taxes, both for wholesalers and retailers – and most taxes are ultimately passed to consumers. It also requires fees for wholesale and retail licenses.

The bottom line is that consumers might not see much difference at the checkout stand, at least initially.

More money for schools and public safety

Because of the higher taxes and fees, supporters say there will be more money for schools, health care and public safety. It’s a claim that seems to run counter to their other selling point of lower prices, but it is backed, in large part, by a state study.

The state could collect an estimated $216 million to $253 million extra in taxes over six years and local governments could receive between $186 million and $227 million more over that period, OFM estimates after making a string of assumptions. “There is a wide range of fiscal impacts,” the analysis notes, although it doesn’t come up with any scenario where the state and local governments are net losers.

The initiative does not designate a split for schools, health care or public safety, although education is the biggest expense for the state and public safety is typically the largest item in city and county budgets. Most of the money goes first into the state general fund, OFM notes, “which may be used for any governmental purpose, as appropriated by the Legislature.”

Buying the election

Each side accuses the other of some version of this, but ignores their own actions. Campaign contributions already total $22.7 million for the yes campaign and almost $12 million for the no campaign. Those are records for the most money spent to pass an initiative, most spent to defeat an initiative, most amount raised by both sides in an initiative campaign. Costco’s $8.9 million contribution on Oct. 17 to the yes campaign was the largest single contribution.


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