PubliCola's 2011 Election Ratings: I-1183

By PublicolaPicks October 19, 2011

Sticking with our commitment to be a more objective and balanced source of news (yep, this “liberal” site is the site that broke the story that Democratic gubernatorial candidate Jay Inslee got busted by the state for trying to transfer unlimited "surplus funds" from his federal congressional campaign to his campaign for governor), we’re doing things differently this year than we have in the past.

Inspired by the even-keeled Seattle/King County Municipal League's approach to candidates (rather than endorsing based on ideology, the Muni League rates based on skill, experience, and policy acumen), we’ve been talking to candidates and interviewing folks on both sides of the ballot measures and coming up with our own ratings.

On ballot measures, rather than telling you how to vote, we’re identifying the best and weakest arguments from both sides.

We begin rolling out PubliCola's ratings today with our take on I-1183, this year's measure to privatize liquor sales. We'll be publishing our ratings on the other initiatives and candidates over the next several days.


1-1183 would take the state out of the liquor retail business. The Washington State Liquor Control Board would still regulate booze sales and enforce liquor laws, but the hard liquor market would be turned over to private retailers.

However, not just any mom and pop corner store would be able to sell booze; only outlets 10,000 square feet or bigger would qualify for a liquor license. (There is a loophole that would allow some smaller stores to sell hard alcohol, but it would only apply to those outside the big-box stores' "trade area"---a murky term that is not defined in the proposal or state law).

The state would still collect its sales tax on booze and also hit retailers and distributors with a fee totaling 27 percent of sales (17 percent on retailers and 10 percent on distributors). Additionally, retailers like Costco could also be distributors. The Office of Financial Management estimates state revenues would increase by around $230 million and about $200 million to local governments.

Top contributor for: Costco, $22 million

Top contributor against: Wine & Spirits Wholesalers of America, $9 million

Best argument for I-1183

The state's monopoly on booze sales stifles competition and hits consumers with an arbitrary markup. By increasing the availability of hard liquor to consumers, the state will benefit from higher tax receipts and from an automatic 27 percent draw on sales.

Getting the state out of the booze market while simultaneously increasing state revenues? This is a bipartisan dream.[pullquote]Getting the state out of the free market while simultaneously increasing state revenues? This is a bipartisan dream.[/pullquote]

Most misleading argument for I-1183

Proponents argue that free-market competition would mean lower booze prices for consumers. This isn't the case. The current state markup is about 52 percent—which is at the low-end of the 49 to 67 percent markup OFM estimates private retailers will add on to make a profit.

And, in fact, it's the lack of competition that will nudge the consumer price to the higher end of the scale at any independent groceries that are allowed to sell liquor, because they can't compete with Costco's volume clout. I-1183 knocks down the three-tiered system—distiller, distributor, and retailer—so the current rules regulating unfair volume discounts will go out the window.

Best argument against I-1183

If I-1183 wins, it will be a defining blow to Washington State's initiative system, establishing a precedent for self-interested private companies to write and pass laws by spending millions of dollars. (We're three weeks away from election day now and Costco has already spent a precedent-shattering $22 million for the I-1183 cause.)[pullquote]If I-1183 wins, it will be a defining blow to Washington State's initiative system, establishing a precedent for self-interested private companies such as Costco to make law.[/pullquote]

Getting the state out of the liquor business may be a sensible goal, but should voters simply trade a state monopoly for a private one? Here are just two unfair advantages that Costco has written into the initiative: 1) Because the measure limits licenses to stores that are 10,000 square feet or bigger, many smaller, independent neighborhood groceries such as Ken's Market, IGA, Ralph's, and PCC, which are typically between 7,000 and 9,900 square feet, won't be to sell booze, while the nearby Costco or Safeway will.

2) Even though they'll be able to bypass the distributor, Costco would be both exempt from contributing to an initial $150 million fund that distributors are required to cover, and be exempt from the distributor fee in general. This twist gives them an unfair advantage over any indie grocers that are able to sell booze (who have to go to distributors and pay the 10 percent fee)—and over distributors themselves, which Costco could ultimately be competing with.

Most Misleading Argument against I-1183

The opponents of I-1183 have made a big deal out of a loophole in the initiative that allows stores smaller than 10,000 square feet to sell booze if there isn't another qualifying store in the same "trade area." However, that term isn't defined in the initiative, giving opponents the opportunity to draw up their own maps using their own definition to hype the number—more than 900—of mini-marts and corner convenience stores they say will start selling hard liquor. It's a "what if" scare tactic that ignored the fact that the WSLCB has the final say on what constitutes a trade area and who can sell booze.

Newspaper endorsements to check out: The Pacific Northwest Inlander, Spokane's alt weekly, came out against 1183 (focusing on the initiative's customized Costco advantages) while the Everett Herald gives I-1183 the thumbs up for boosting state revenues.
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