City Revenues Threatened by Wash. Liquor Deregulation Initiatives

Local officials in Washington state say that two proposed initiatives to deregulate the state's liquor industry would shrink their budgets, the Columbian reported Oct. 12.

The state collects monies from excise taxes and from permits, licenses, and retail sales paid to the state's liquor control board. Those funds are distributed to the state's cities and counties each year.

Voters are considering two related initiatives that would eliminate those funds by privatizing alcohol sales. Under both initiatives, any business could sell alcohol. Initiative 1100 would allow retailers to buy from manufacturers and leave the excise tax unaffected. Under Initiative 1105, retailers would still have to buy alcohol from wholesalers, but the state excise tax would sunset in April, 2012.

A recent Marin Institute report said that privatizing alcohol distribution in the state could cause alcohol consumption to rise by seven percent and that the state could lose money, in part because of alcohol-related criminal justice costs.

If one of the initiatives does pass, cities and counties would lose about one to two percent of their revenues. “With the current economic times, it is significant,” said Joan Durgin, director of finance in the city of Camas.

“It’s important now with the drop in assessed values — our property taxes are dropping,” she said. “Losing $220,000 could be a couple of employees.”

In many Washington cities, the monies are not earmarked for specific uses. Instead, they go toward each city's general fund. In Ridgefield, that helps pay for things like public safety, roads, and parks, according to City Manager Justin Clary.

In the city of Battle Ground, the state's profits on liquor underwrite substance abuse treatment as well as police and court expenses for responding to alcohol-related issues. “The loss of these revenues will directly reduce these efforts,” said Finance Director Catherine Huber Nickerson.

NPR reported Oct. 19 that the opposition to the campaign was largely funded by the beer and wine industry and that the primary supporters of the initiatives include Costco and some grocery stores, restaurants, and big retailers.

The Protect Our Communities coalition includes public officials, firefighters, church groups, labor unions, substance abuse prevention groups, and beer and wine distributors.