Liquor privatization’s false promises already exposed

By DAVID GROVES
The Stand

(June 5) — Last fall, when Costco spent a record $22 million to pass Initiative 1183 privatizing Washington state liquor sales, proponents claimed that consumers and state government would both win. Ending this “state monopoly,” they said, would result in cheaper prices thanks to private competition, plus the state would collect hundreds of millions more in revenue.

Voters bought it. But now, after less than a week of private liquor sales under I-1183, Washingtonians are already complaining about higher liquor prices. The (Longview) Daily News reports today that many who live close enough to the border are already flocking to Oregon to buy their booze.

The Rainier Liquor Store is bustling with Washington state customers fleeing higher prices under the state’s new liquor privatization system. Owner Traci Brumbles Monday said business at her store, less than five minutes from the state border, has jumped 20 percent to 30 percent over the last week. … Oregon prices are set by the state and have traditionally been a couple dollars lower per bottle than Washington, and now the difference is even larger. For example, a fifth Jack Daniels is $21.95 in Rainier, compared to $26.31 including taxes at the Longview Fred Meyer.

Retailers are blaming the high tax rate for the price increases. Those liquor taxes are shocking many consumers who think they are getting a deal until they get to the checkout line, where the taxes are applied.

But those taxes were a key selling point of I-1183. The failure of Costco’s 2010 liquor-privatization initiative was widely attributed to concerns about the impact on public safety. So I-1183 proponents were careful not only to restrict sales to stores with at least 10,000 square feet (to avoid “mini-mart sales”), but also to impose taxes intended to create more revenue for local law enforcement.

Proponents vowed that “I-1183 will generate $400 million in new revenue for state and local governments.” When I-1183 opponents ran television ads warning of the high taxes it imposed, those ads were denounced as a “scare campaign” that should be ignored.

In a column in The Stand prior to the I-1183 vote, a prescient Brendan Williams warned that the only way state revenue would increase is if consumers buy more booze at higher prices:

Only if customers — ‘the 99%’ — pay more to inflate Costco’s profits will the state realize a return. … And remember, the state’s lower markup not only sustains the state budget but also pays living wages to those working in state-run stores. Ignoring these facts, the I-1183 campaign both promises new revenue and claims liquor will be cheaper.  That’s impossible.

In its editorial today, “Liquor prices didn’t drop? That shouldn’t be a surprise,” The (Tacoma) News Tribune reminds voters that they asked for it.

Many folks seem to think the higher costs were imposed by “the state” or “the Legislature,” even “the governor.” No, the voters are responsible for those higher costs. That’s what they voted for when they marked “yes” on I-1183. Preserving revenue that allows the state and local government to enforce liquor laws at thousands of new points of sale was written into I-1183 in order to get voter support.

Is that local law enforcement money is really necessary? Today’s (Spokane) Spokesman-Review offers a cautionary news story, “Alleged vodka theft ends in arrests:”

Employees at a Spokane grocery store pepper sprayed the front doors to try to stop two suspected booze thieves from attacking them, according to police.

As the consumer sticker shock over high liquor prices sets in, the Distilled Spirits Council is already complaining that it blames high prices on Washington’s liquor taxes, which it claims are the highest in the nation. The News Tribune says there’s already “talk of another initiative to strip away the liquor taxes.”

That would create the perfect storm: Cheap, readily accessible liquor with little funding for enforcing violations and dealing with the aftermath of more drunk driving, underage drinking and deadly accidents. Approving that would only be compounding the mistake voters made when they voted for I-1183.

Sounds like a job for Tim Eyman.