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State sale of liquor stores upheld

Court rejects challenge to I-1183

OLYMPIA — The state can continue its exit from its wholesale and retail liquor business, due to take effect Friday. The state Supreme Court ruled 5-4 today that Initiative 1183, which voters approved last November, is constitutional.

The court’s majority rejected the emergency challenge from several groups, saying initiatives which pass are presumed to be constitutional, and opponents hadn’t proved otherwise.

Opponents had argued I-1183 contained more than the single subject the state Constitution requires for initiatives, and that the ballot measure misled voters by raising taxes that it called fees.

The debate over fees and taxes split the court, and came within one vote of overturning the initiative.

The ballot for I-1183 called for “license fees based on sales”. That’s really a tax, opponents claimed, and the term fee was used to get around the voters’ natural antipathy to taxes.

But the term is not “palpably misleading or false,” Justice Steven Gonzalez wrote in the majority decision, and the court won’t void a law passed by the voters on the technical significance of a word, where it seems unlikely voters were deceived.

Use of the word fees for what are really taxes is “a classic bait-and-switch, rendering I-1183 unconstitutional,” Justice Charlie Wiggins wrote in a dissent signed by two other justices. Justice Tom Chambers also challenged the use of the term fees in a separate dissent.

One of the subjects that opponents claimed weren’t properly described in the ballot title was a provision to set aside $10 million from revenue collected from liquor sales to be given to local governments for public safety, but not necessarily programs related to liquor or liquor consumption.

But the money set aside for public safety does have a connection to liquor, whether or not it’s specifically directed to liquor control programs, Gonzalez wrote. Liquor consumption affects public safety, and that burden falls heavily on local governments.

“It would be improper to overlook the impact that changes to liquor regulation could have on general public safety expenditures by local governments,” he wrote.

Opponents said the money for public safety was added to the initiative as an exercise in “logrolling” or buying support for one thing by offering something else. Gonzalez said it was “the product of permissible lawmaking.”

Wiggins disagreed. Setting aside money for public safety isn’t a problem by itself, but it isn’t directly related to privatizing state liquor sales and adding it to the initiative took I-1183 beyond the Constitution’s single subject restriction.

The state established a monopoly on retail and wholesale liquor at the end of Prohibition, and that system withstood several attempts to change it until last year when retailers led by Costco drafted I-1183. In the most expensive initiative campaign in state history, fueled on one side by some $20 million from Costco on the yes side and more than $12 million from liquor, beer and wine distributors on the no side, voters approved I-1183 by about 59 percent.

Earlier this year, the state auctioned off the licenses to its retail stores, which have been slowly closing this month, and began selling licenses to retailers and wholesalers. The new law requires that most stores have at least 10,000 square feet, and many of the state’s large supermarket chains, as well as Walgreens and Costco have purchased retail licenses. They will be allowed to sell liquor starting Friday.

The state has already auctioned off the licenses to the liquor stores it owns, and sold licenses to wholesalers and retailers. Retail stores can offer liquor for sale, starting Friday.