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Originally published Wednesday, November 3, 2010 at 12:16 AM

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Liquor initiatives: 1 down, 1 still alive

Voters sank one initiative that would have pushed the state out of the liquor business, and a second measure backed by Costco Wholesale...

Seattle Times business reporter

Voters sank one initiative that would have pushed the state out of the liquor business, and a second measure backed by Costco Wholesale was trailing Tuesday night.

Initiative 1105 received just 37 percent of the vote. The Costco-supported I-1100 had 48 percent with more than half the votes counted.

Although both initiatives would have taken liquor sales out of the state's hands, they had major differences: I-1105 eliminated state liquor taxes and required retailers to buy through distributors, while I-1100 sought to deregulate the system by allowing volume discounts, among other things.

"It's pretty clear that a large percentage of people in Washington want to change the liquor system in this state," said Ashley Bach, spokesman for the I-1100 campaign.

"It's encouraging that we're this close given that we were up against an aggressive, well-financed campaign," Bach said Tuesday night.

Andy Grow, a spokesman for the campaign against both initiatives, said he's "cautiously optimistic."

That campaign raised $9.1 million, most of it from beer distributors, large beer manufacturers and unions representing the nearly 1,000 workers expected to lose their jobs if the state gets out of the liquor business.

Costco contributed $4.8 million of the I-1100 campaign's $6.2 million. Two liquor distributors backed I-1105 with $2.7 million.

"We anticipated 1105 was going to have trouble because our revenue message has never really resonated," said Bob Stevens, a consultant to I-1105, referring to concerns that the measure would have eliminated state liquor taxes.

Without new taxes, one official estimate said it would cost the state more than $100 million a year in lost revenue.

The liquor distributors also like I-1100, he said. "I'm hopeful they'll pull it out."

Currently, 325 stores sell liquor in Washington, a number that could balloon to more than 3,000 if grocery stores and minimarts are allowed to sell it, according to the state Auditor's Office.

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The state alcoholic-beverage system, which also collects wine and beer taxes and licensing fees, generates nearly $1 billion a year in income. More than half pays for the liquor, the stores and distribution.

The system also sends money to the state and local governments.

During the last fiscal year, the state received $302 million from the system, and cities and counties received $69 million.

The Office of Financial Management estimated that the state could lose up to $17 million a year under I-1100 and up to $104 million a year under I-1105. Local governments could lose more than half of the money they receive under either initiative, the office said.

Proponents of the measures say those estimates are high.

Most beer distributors were ambivalent about I-1105 but vehemently opposed I-1100, because they worry about their place in a market where price negotiations — among other things — are permitted. As middlemen who warehouse and sell beer to restaurants and other retailers, they see deregulation as a way for such retailers as Costco to muscle in on their business.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com

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