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State urged to ignore bids on liquor warehouse

OLYMPIA — After studying two proposals for taking over the state’s liquor distribution system, the state Office of Financial Management is advising a pass on both.

In a letter to the Liquor Control Board, OFM Director Marty Brown says the proposal’s “do not represent ‘net positive benefit’ to the state or local governments.”

Selling the state’s liquor warehouse has been a popular proposal in the Legislature, where many members believe the state has no business in the liquor business. Some budget proposals in the last session counted on revenue from the sale of the warehouse to help close the gap between expected revenues and scheduled expenses, but critics questioned whether the revenue estimates were realistic.

Opposition to state control of liquor has generated three ballot initiatives in the last two years, the most recent being Initiative 1183 on the Nov. 8 ballot and would get the state out of the wholesale and retail end of liquor sales

Before I-1183 was filed, the Legislature passed a law requiring a study of the possible financial benefits of selling or leasing the state’s warehouse and distribution system, while maintaining its retail stores. Companies were invited to submit bids, and OFM was directed to examine them and make a recommendation to the Liquor Control Board, which has ultimate authority over the state’s booze business.

Only two companies bid.

Both had proposals that gave the state and local governments a good financial outcome under some scenarios, but could cost money under other scenarios, the analysis said.

“An award on either proposal…is not in the best interest of the state,” Brown’s letter says.

OFM officials say the findings mean the Liquor Control Board can’t accept a bid from either company, Washington Beverage Co., LLC, or Washington State Beverage Logistics, LLC.

But selling off the state’s liquor distribution system could still happen. That’s part of Initiative 1183, which would repeal the legislation that created the study and the process for considering the bids as well as ending the state’s involvement in wholesale and retail sales. If voters approve it in next Tuesday’s election, distributors could to obtain licenses to set up their own systems, and some large retailers like Costco, which has contributed more than $22 million to the campaign to pass the initiative, to set up its own warehouse, distribution system as well as offering retail liquor sales in its stores.