March 18, 2011
New liquor privatization initiative filed

I filed a revised liquor privatization initiative last week. It has been assigned number 1157 and is on to the Attorney General's office for a ballot title and summary. (full text: here)

It's similar to I-1100, but has a few key changes to address the most salient concerns that appear to have led to 1100's defeat. Specifically:

1. Much stricter criteria to get a license to sell spirits: An applicant has to have been a licensed grocery or specialty beer/wine retailer with no liquor public safety violations (e.g. sale to minors) for five years. Convenience stores (including gas station mini-marts) aren't eligible. (See Sec. 14 for more details)

2. It is revenue positive.

(a) It preserves all existing statutory taxes (which 1100 also did, but spoiler initiative 1105 did not). Unlike 1100, 1157 also preserves the revenue from the excess portion of the state store "markup", which the liquor board tacks on to the bottle price so it can collect more money for state and local governments -- i.e. it's a de facto sales tax. I-1157 would preserve the same effective tax as under the state's markup that would be in place next year, but in the form of a transparent statutory tax. Consumer prices probably wouldn't be as low as they would have been if 1100 had passed, but consumers will still get a much better deal than we have under the current system.

(b) It also directs the liquor board to auction off franchises to operate liquor stores at existing store locations. The existing locations are presumed to be valuable because customers are used to shopping there, and because they're fitted for selling liquor. Along with the one-time sale of other assets, such as the distribution center, this is expected to produce substantial revenue in the near term.

More to come.

Posted by Stefan Sharkansky at March 18, 2011 10:44 PM | Email This
Comments
1. Good job. With these key changes compared to I-1100, I-1157 should have a good shot at passing. Note that even with spoiler I-1105 on the ballot, and having to fight negative attack ads, I-1100 got a 46.6% YES vote last time around; i.e.:
I-1100 was still fairly close.

Posted by: Methow Ken on March 19, 2011 12:42 AM
2. Great news.
At a time when the economy is in depression for everyone not sucking on government teat, I'm awe struck how the liberals get away with business as usual in state government. When state revenue is falling because of the Obama depression, liberals will not even consider trimming such vital services as state liqor stores.
Their solution is always "spend more" and "tax more". Private individuals and businesses only exist to be piggy banks for the SEIU and AFSMCE.

Posted by: Attila on March 19, 2011 05:26 AM
3. Gee. Can we expect Luke Esser to join with his fellow leftist union hack, Chris Vance, to make a pile doing the union's bidding to continue to suck us dry in the cause of state liquor stores?

More lies to come? More exaggerations? More twisting of the facts? More bogus, nonsensical ads, the kinds of thing that SHOULD have been far beneath former chairs of the WSRP?

I'm sure they've both got calls into their leftist masters.

The both of them sicken me.

Posted by: Hinton on March 19, 2011 07:30 AM
4. I am not certain I agree with maintaining the Mark-Up as a portion of the initiative. True privatization should be the rule. If you want to maintain the mark-up can you also cap the amount of revenue that flows to State at existing levels? Why should the State be guaranteed anything? They (the State) will be seeing increased B&O and tax revenues from the increased sales anyway.

Posted by: Smokie on March 19, 2011 09:05 AM
5. Sounds like socialism lite. Why bother? *Yawn*

Even so, the unions and other statist jerks like Chris Vance will lie through their teeth to defeat it. They can't stand the thought of any free market reform at all.

I'll put up a case of your favorite beer that this too will fail.

Posted by: Kato on March 19, 2011 10:14 AM
6. An awful lot of us leftists voted for I-1100, hopefully even more will vote for this new initiative.

Posted by: Eric on March 19, 2011 10:57 AM
7. Yeah...Eric. A lot of people voted for I-1100. In fact, who would vote against it except some government people tied closely with the Government Unions? Naah...my take is it is those who count the votes and not who vote is where it is at. This State is beyond mere Corruption.

Posted by: Daniel on March 19, 2011 11:13 AM
8. It looks like you've done a great job of addressing the concerns that lefties like I had with 1100. I like it.

Being devil's advocate, I suppose I could imagine 2 arguments against 1157:

1) Anything that makes any type of alcohol more widely available will, all other things being equal, increase alcohol abuse (as well as increasing responsible use). That doesn't mean we shouldn't pass 1157, just that there are always tradeoffs. I think 1157 makes this tradeoff responsibly. And the legislature could always use the additional tax revenue to fund programs to prevent and treat alcohol abuse.

2) Some have suggested that our state liquor stores would be the perfect place to sell pot if it's legalized. This assumes that people might be willing to legalize pot only if it's less available than liquor. There is something to this, but I have enough doubts about both the wisdom and practicalities of everything about this to keep it from being a big issue.

So I raise those points not as serious objections, just as factors that I'm sure we'll hear mentioned during the campaign. Cheers!

Posted by: Bruce on March 19, 2011 11:52 AM
9. Nice work Stefan. I wish I had a law degree like Mrs. Shark. Sensible balanced initiatives like this one are a great way for citizens to do the jobs WA Democrat Politicians won't do.

One way or another we have to lead the Democrats out of their statist cocoons and back to fiscal reality.

We need fifty 1157s.

Posted by: Jeff B. on March 19, 2011 11:57 AM
10. Smokie + Kato --

Last year I thought that voters would see elimination of the markup as a net positive. I was wrong. The various polls, public discussion and results told me that most voters were in favor of privatization in principle but many voters had concerns about some of the specific details. And eliminating the tax-like portion of the markup was one of those details. While most voters said no to new taxes, enough voters also wanted to keep all existing ones in place and voted against I-1100 accordingly.

Among other things, winning a privatization initiative entails winning enough votes from the people who voted against the last one, and that includes changing some of the details from the last one.

Posted by: Stefan Sharkansky on March 19, 2011 12:18 PM
11. I was glad to see the Times article about this yesterday. Good job, Stefan; glad you brought it back.

Posted by: Michele on March 19, 2011 12:48 PM
12. You've got our votes (again). Hopefully, the faux-conservative Vance doesn't take blood money again to oppose this. Also, it needs to do better in eastern Washington, where is failed by a pretty good margin. Is anything going to be done so it gets better traction over there?

Posted by: Palouse on March 19, 2011 12:57 PM
13. I guess if people need to be led into freedom from State monopolies through deception and half-measures this is as good a vehicle as any. Best of Luck. Will Costco be sponsoring the initiative signature drives at ther locations again?

Posted by: Smokie on March 19, 2011 01:21 PM
14. Bruce @8

You're right, those objections are certain to be raised.

It's neither possible nor necessary to persuade every opponent to support it.

To address those specific objections for people who are open-minded and trying to decide --

1) The only stores eligible to sell spirits have been selling alcohol for 5 years with no violations for selling to minors. That means they all do a better job at preventing teen drinking than the average state store. Some voters will still worry that adults can buy bourbon in more locations than they can at present. The fact-based argument is that there's no empirical evidence that allowing some stores which already sell alcohol to sell different types of alcohol has ever changed drinking habits in any other place where that has been introduced. Voters who remain afraid of current alcohol retailers selling a larger variety of alcohol probably won't ever vote for privatization under any circumstances.

Regarding prevention -- I-1100 would have increased funding for enforcement, prevention and treatment from licensing fees. 1157 would increase funding even more through higher licensing fees.

2) I know some people want to keep the state stores open so they can sell marijuana. That's never going to happen. Marijuana might well be decriminalized in the foreseeable future. But it's unrealistic to expect the state government to start selling dope. I think that proposal is being promoted in part by state store backers in order to fool some people who might otherwise support privatization into supporting the state stores.

Posted by: Stefan Sharkansky on March 19, 2011 01:57 PM
15. Many of those who voted against the I-1100 & I-1105 were social conservatives, worried, as Bruce said, that it would lead to more drinking and greater, if illegal, access to booze by minors. The limitations in I-1157 on which stores are allowed to sell booze should ease some of their concerns.

Posted by: Eric on March 19, 2011 02:07 PM
16. If I have read Section 14 correctly, a liquor license can only be issued to a location that has sold beer/wine for the last five years, with no exceptions.

So Costco or Sams Club can get liquor licenses for their existing locations, at least if they have been open for five years. But if they want to open a new Costco or Sams Club warehouse -- even if every existing location in the state has a liquor license -- the new location must sell beer and wine for five years, before they can get a liquor license.

Will Costco still be enthuasiastic about your new initiative?

Posted by: Richard Pope on March 19, 2011 09:13 PM
17. So the people who winter in California rave about the cheep liquor and bring back umpteen cases of their favorite, at a lower cost of around $15 per 1.5L bottle. They like it that they can get it at the Pharmacy and grocery. BUT they worry that all those kids will get cheap booze if WA dumps the State Stores, so they vote against it and then bring back another year's supply of 1/2 price California booze. Likely only costs the State a few hundred million.

Posted by: Terry on March 19, 2011 09:22 PM
18. Stefan, why do you hate the children?

Posted by: pudge on March 19, 2011 11:46 PM
19. I hope we're doing something to address the religious right with 1157. From looking at the maps, they were clearly the ones who defeated it (other than Thurston county where it was clearly the state employees union - they're a lost cause). Is there anything in the initiative that would prohibit Eastern Washington from being more strict? Maybe we can assure them that, if they so desire, they can prohibit additional outlets on a county-by-county (or other jurisdiction) basis.

As to the other folks who complained about socialism lite. Washington State is status quo. We need initiatives that propose this level of change to be gradual. Okay, so 1157 isn't everything we might have wanted, but it's a step in the right direction that maybe can be further corrected in another 2 years.

Posted by: Anthonw on March 22, 2011 08:44 AM
20. I posted this at the last election. It's still true.

"The 'Yes on I-1100' Costco-paid shills promise everything they can think of to convince you a Yes vote will deliver a deep religious experience far and wide to all Washington State residents. One of the promises is deeply discounted booze. Not happening. It can't. It's just another lie.

Using a typical $15 bottle, 25% goes to the distiller, 14% pays the Federal Tax, 21% pays the State Sales Tax, and 28% pays the State Liter (Liquor) Tax. This leaves 11% for operating the Liquor Control Board, distribution, and operating the retail stores. 11% is all there is to work with.

If Costco agrees to zero markup and absorbs all distribution and sales costs, the absolute most the price can possibly drop is 11%. This is not likely to happen. What is more likely is the Costco markup will be north, likely far north of 11%. In truth, the only way prices can go is up, not down."

Posted by: Bob Farland on March 22, 2011 12:44 PM
21. I guess I'm looking forward to the "more to come." Reading comments here, it seems many people are once again focused on the "I want cheap tequila at Costco" part of the issue. I hope 1157 approaches the privatization of liquor in a manner that addresses the concerns of the state's 140 craft breweries, the vast majority of whom vehemently opposed 1100. Craft breweries are small, privately owned businesses and they make up one of the only growth industries in today's local economy. I don't want to pass anything that makes it more difficult for small businesses to grow and prosper in Washington.

Posted by: K Jones on March 25, 2011 08:25 AM
22. Stefan: Great work. But, beware of the single subject mandate for all laws in the WA Constitution. Our Supreme Court has used it to defeat several Initiatives in the past.

Posted by: Paddy on March 25, 2011 01:42 PM
23. If the markup isn't removed through this initiative, prices will remain about the same. People will just shift their blame for high prices from government to Costco.

We need to get ride of the stores and the markup.

Posted by: Good Dram on March 25, 2011 11:13 PM
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