Fact-Check Tuesday

Anti-Privatization Ads Begin

But how accurate are they?

September 7, 2010

The radio ad above, sponsored by a group called the Protect Our Communities Coalition, features a police officer arguing against liquor privatization initiatives 1100 (the one Costco likes) and 1105 (the one backed by big distributors), both of which will appear on the ballot this November.

Spokesperson Greg Hopkins, a Tacoma police officer, makes the argument against privatization thusly:

He says our state’s liquor stores enjoy "a 94 percent success rate" in not selling hard alcohol to minors. This is accurate, and impressive: Washington sells less liquor to minors than any state in our great union. Hopkins then says that in 50 percent of sting operations at in-state convenience stores (where beer and wine are sold), minors were able to purchase alcohol. So if these stores sold liquor, the argument goes, minors would be able to buy hard alcohol in 50 percent of cases as well.

The problem with his argument is that it assumes enforcement would remain as it is—the only change would be that hard alcohol was on the shelves at 7-11 alongside beer and (crappy) wine. This would almost certainly not be the case. Part of the backbone of the privatization argument is that the liquor control board should be focusing on alcohol safety and education instead of liquor sales, as it does in many states. Therefore, I think a more useful stat is one recently published in the Seattle Weekly. In states where liquor is sold in private stores, minors are denied booze in 75 percent of cases.

Hopkins goes on to say that if 1100 or 1105 pass, there would be thousands more stores selling liquor in Washington State. True. Initiative 1100 proposes to do away with Washington State’s three-tier system—which segregates the manufacture, distribution, and sales of alcohol—altogether, privatizing all liquor stores and allowing alcohol manufacturers and retailers to do their own distributing. Initiative 1105 proposes to privatize retailers only, keeping state distribution laws in place. Either way, the more than 5,000 in-state stores that now sell beer and wine would also be eligible to sell liquor.

Then Hopkins says: "Youth access to hard alcohol could increase by 400 percent." Again, however, he ignores the idea that WSLCB would be newly freed up to focus on the underage issue. From the homepage of Modernize Washington, the group behind initiative 1100: "I-1100 directs our state liquor board to devote itself to enforcement, education and the fight against teenage drinking. Instead of sales, state government will be focused on safety." In other words, it’s the WSLCB’s job to concentrate on making sure stores that sell to underagers lose their licenses. If it does that job, the privatization argument goes, youth access to hard alcohol should increase zero percent.

The ad also claims that privatization would "cut over 200 million from a central funding for local police, firefighters, and alcohol enforcement." Not exactly. In 2009, the WSLCB made about $332.7 million, according to the Seattle PI, $199 million of which went into a general fund. Some went to cities and counties, some went to health insurance for the poor. It did not all go to local police, firefighters, and alcohol enforcement.

But cities and counties would certainly lose out on funds generated from state liquor sales. Both proposals have plans for how to recoup that money. (Two studies have been conducted to see how the money issue would shake out, they came to very different conclusions.) Backers of 1100 argue that Washingtonians buy tons of liquor out of state due to the LCB’s massive mark-up on booze. Offered lower prices and a lot more access, they’d buy their booze here instead and generate tons of tax revenue. The legislature would still be free to tax liquor, 1100 people points out, and the state would make money of of fees and other sources. Under 1105, new liquor retailers would pay the state a percentage of sales for the first five years in operation and the LCB would recommend a liquor tax to the legislature.

As we approach the November ballot, expect to see more ads on both side of the argument.

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