PubliCola Picks "No" On Initiatives 1100 and 1105

By PublicolaPicks October 15, 2010

PubliCola strongly urges readers to vote against both liquor-privatization initiatives, which would wreak havoc on the state budget, hurt small businesses, increase underage drinking, and threaten public safety statewide.

We aren't against the idea of liquor privatization---as privatization proponents have pointed out, selling Jack Daniels is hardly a core function of state government---but the public will have a killer hangover the morning after either of these two liquor privatization measures pass.

Our first objection is an urgent practical matter: Both the Costco-and-Walmart-backed Initiative 1100 and the beer-distributor-backed Initiative 1105 would require cuts to the state budget at a time when it can scarcely afford to take another hit. According to the state Office of Financial Management, 1100 would cost the state between $76 and $85 million over five years (and local governments between $102 million and $180 million); 1105, OFM estimates, would cost the state between $486 and $520 million over five years. Proponents of 1100 argue that the revenue losses under their measure aren't a big deal; 1105 backers, meanwhile, say the state legislature will raise taxes to make up the taxes 1105 eliminates. Neither argument is credible.

Aside from the revenue concerns, the liquor initiatives would have lasting deleterious impacts on Washington's communities. According to an analysis by the state auditor's office, the number of retail stores selling hard liquor could grow to more than 3,300 under either scheme, with hard liquor available between 6 am and 2 am. Privatization proponents claim the state auditor's numbers are wrong, and that the number of stores selling hard liquor will actually go down. If they're wrong, we believe they are, and liquor consumption does increase, as we believe it will, the result will be more drunk driving, more problem businesses, more binge drinking, and more nuisance crimes like public inebriation.

Privatization will also lead to more underage drinking, as hard alcohol becomes easier for minors to get their hands on. Currently, state-run liquor stores have a 94 percent compliance rate with underage-drinking restrictions; private stores ask for ID just 75 percent of the time, meaning that one time out of four, a kid can walk out of a convenience store with a bottle. Initiative backers say that's no problem: Once all the state liquor stores are shut down, the liquor control board can focus exclusively on enforcement. But since the number of stores selling liquor will be much higher, and the number of liquor-enforcement officers will stay the same, that math makes no sense.

States that have privatized their liquor sales have seen liquor stores concentrate in poor areas the same way payday loan stores and pawn shops do in Seattle today. Besides the fact that this is bad for neighborhoods---ask anyone in the South End if they'd prefer another corner store selling Steel Reserve and Colt 45 or a locally owned boutique---it will make it even harder for low-income residents to get fresh, nutritious food. Many of Seattle's low-income neighborhoods are already food deserts---places where residents must choose between buying fast food or shopping at high-priced corner stores. Allowing those stores to give shelf space to liquor will only exacerbate this problem.

The two initiatives do differ in some significant ways.

I-1100, the more popular of the two initiatives (if the polls can be believed), would give every retailer in the state that currently sells beer and wine the right to sell hard alcohol, eliminate the markup on liquor sales, and leave the existing liquor tax in place. Costco and other large retailers support 1100 it  because it would allow them to negotiate with liquor manufacturers and distributors for volume discounts, giving them a huge advantage over small stores that deal in smaller quantities. Companies like Costco will also be able to become distributors as well as retailers---effectively replacing the state monopoly with a private one. Big wine and liquor companies like it because it would allow them to buy shelf space in big grocery stores, pushing out smaller craft breweries, winemakers, and distilleries.

Initiative 1105 preserves the wall between retailers and distributors. But it contains a poison pill of its own, eliminating the tax on hard alcohol (as well as the markup) and allowing stores of every size to buy a liquor license at a flat rate of $1,000.

I-1105 supporters maintain the measure requires the state to restore, or even raise, liquor taxes. But it doesn't. Instead, the measure "recommends" that the state legislature pass new liquor taxes to produce $100 million in new revenues. In an election year when Tim Eyman's Initiative 1053, requiring an insurmountable two-thirds vote of the legislature to raise taxes, we're highly skeptical that the legislature will follow the voters' "recommendation."

Both of these privatization measures are written to favor big businesses at the expense of consumers, public safety, and basic state services. If voters really feel we need more liquor stores open longer hours, they should put pressure on the legislature to reform our current system. But they should reject both of these poorly written, ill-timed proposals.

We’ve also endorsed on Initiatives  1082 and 1107.

And don’t forget about PubliCola’s 32 No Brainer picks (including our Patty Murray, Joe Fitzgibbon, and Charlie Wiggins endorsements, and our anti-1053 endorsement).

Editor's Note: Full disclosure, Sandeep Kaushik, who works on the No campaign, co-founded PubliCola in January 2009. He has no editorial role at PubliCola.
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