This Washington
Booze Initiatives Would Tap State Budget. State Says
As we noted in this morning's Morning Fizz, the Office of Financial Managment (OFM) was set to release a fiscal analysis of the two booze initiatives today.
Here they are:
OFM's study of I-1100—a Costco backed initiative to privatize liquor sales that takes away price controls and market regulations, allowing volume discounts and allowing retailers like Costco to get into the distribution business—says it would decrease state revenues by an estimated $76 million to $85 million and decrease total local revenues by an estimated $180 million to $192 million, over five years.
OFM's study of 1105, which would also privatize liquor but would keep pricing and market regs intact, would decrease state revenues by an estimated $486 million to $520 million and local revenues would decrease by an estimated $205 million–$210 million over five years.
OFM also noted that the state would make about $30 million from the sale of its liquor distribution center.
We have calls into both campaigns to get their take on the OFM findings, although generally, they argue that privatizing liquor will increase sales and, in turn, tax revenue for the state.
Meanwhile, the 1105 campaign released as study late yesterday afternoon saying the state, counties, and cities would see an extra $131 million in revenue over five years from taxes, licenses, and the sale of the state's liquor inventory.
UPDATE:
Charla Neuman, the communications director for 1105, says: "This is political, bureaucratic garbage. It's no secret that the bureaucrats are trying to protect state jobs, and they don't want either either initiative to pass."
Neuman accuses OFM of "only reading half of the initiative, cherry picking which parts of the initiative they wanted to analyze—a blind man can see that initiative will raise over $100 million dollars."
She points to Section 101 of the initiative, which was put in, she says, to explicitly ease concerns about state coffers; that section says the rate of taxation will be recommended to "generate at least the same annual revenue for the state and local jurisdictions." (It's line 26 for you initiative nerds.)
But, given the loss in sales revenue, wouldn't that require quite a tax hike. No, says Neuman—pointing out that there will be new B&O revenue for the state, licensing fees, and savings on state overhead.
Calling the OFM report "bogus scare tactics," she says, "I guess because the initiative was written in plain English, the bureaucrats didn't know how to read it."
The 1100 campaign did not call us back, but they did send out a statement which cites many of the same revenue issues, such as new B&O taxes as well as noting increased sales from lower prices. The statement says in part:
Here they are:
OFM's study of I-1100—a Costco backed initiative to privatize liquor sales that takes away price controls and market regulations, allowing volume discounts and allowing retailers like Costco to get into the distribution business—says it would decrease state revenues by an estimated $76 million to $85 million and decrease total local revenues by an estimated $180 million to $192 million, over five years.
OFM's study of 1105, which would also privatize liquor but would keep pricing and market regs intact, would decrease state revenues by an estimated $486 million to $520 million and local revenues would decrease by an estimated $205 million–$210 million over five years.
OFM also noted that the state would make about $30 million from the sale of its liquor distribution center.
We have calls into both campaigns to get their take on the OFM findings, although generally, they argue that privatizing liquor will increase sales and, in turn, tax revenue for the state.
Meanwhile, the 1105 campaign released as study late yesterday afternoon saying the state, counties, and cities would see an extra $131 million in revenue over five years from taxes, licenses, and the sale of the state's liquor inventory.
UPDATE:
Charla Neuman, the communications director for 1105, says: "This is political, bureaucratic garbage. It's no secret that the bureaucrats are trying to protect state jobs, and they don't want either either initiative to pass."
Neuman accuses OFM of "only reading half of the initiative, cherry picking which parts of the initiative they wanted to analyze—a blind man can see that initiative will raise over $100 million dollars."
She points to Section 101 of the initiative, which was put in, she says, to explicitly ease concerns about state coffers; that section says the rate of taxation will be recommended to "generate at least the same annual revenue for the state and local jurisdictions." (It's line 26 for you initiative nerds.)
But, given the loss in sales revenue, wouldn't that require quite a tax hike. No, says Neuman—pointing out that there will be new B&O revenue for the state, licensing fees, and savings on state overhead.
Calling the OFM report "bogus scare tactics," she says, "I guess because the initiative was written in plain English, the bureaucrats didn't know how to read it."
The 1100 campaign did not call us back, but they did send out a statement which cites many of the same revenue issues, such as new B&O taxes as well as noting increased sales from lower prices. The statement says in part:
In the case of I-1100, OFM relied on the information it received from the management of the state Liquor Control Board (LCB), hardly a disinterested party. There was no attempt to hear from the sponsors of the initiative or to consult independent economists who might have a slightly different view.
In general, OFM appears to have taken very conservative estimates of the “costs” of privatization, while ignoring or minimizing factors that would offset, if not ultimately exceed those costs.
