The state Supreme Court heard arguments Thursday that echoed those heard earlier, when a lower court turned back an attempt to invalidate a voter-passed initiative to privatize the state's liquor business.

A decision is expected by June 1, the day the state is to be out of the liquor business, and private retailers — including the initiative's main sponsor, Costco Wholesale — will begin selling spirits.

The case heard Thursday was an appeal of a Cowlitz County judge's ruling in March that found Initiative 1183 to be constitutional. A similar case was filed in King County by unions whose workers stand to lose their jobs because of I-1183; it awaits the Supreme Court decision in the Cowlitz case.

Arguments by lawyers for both sides Thursday centered on whether I-1183 addressed more than one subject, which would make the measure unconstitutional. They also argued about whether voters understood the measure they approved in November.

The original lawsuit was brought by a public-safety group and landlords of a few state liquor stores, but it is financed largely by the Wine & Spirits Wholesalers of America, a trade group.

The justices asked tough questions of both sides and occasionally made comments.

Justice James M. Johnson said in the "old days" it was more important for a ballot title to include everything possible, because that's all people saw in voting booths. Today, with voters receiving pamphlets that include a statement of each initiative and arguments for and against, "it's hard in that context for me to see how voters are being confused," he said.

Michael Subit, the attorney representing the plaintiffs, said, "I don't think they were confused. I think they were misled, which is different."

Specifically, Subit said in an interview later, I-1183 contains hidden taxes.

Other elements not related to liquor, such as $10 million earmarked for public safety, were "enticements for voters and a way buying off the political opposition from the law enforcement community," he added.

I-1183 imposes new charges on liquor distributors and retailers that are expected to be passed on to consumers. The charges make up for money the Washington State Liquor Control board currently generates to cover its costs and distribute money to the state and local governments.

"The public should have been given an opportunity to vote on each of these subjects separately rather than voting them up or down in one log-rolled package," Subit wrote in a court filing.

"It opens up the floodgates to have voters deceived and forced to vote on taxes they don't know about," Subit told the court.

Mary Tennyson, the senior assistant attorney general who argued for the constitutionality of I-1183 and who also represents the Liquor Control Board, said whether it's called a fee or a tax, the money the government will charge distributors and retailers was disclosed to voters in I-1183.

Further, the money being charged is not new to the liquor system, she argued. The state currently charges consumers a "markup" on spirits, and those charges will now move to a private system in the form of these new charges.

"Are you saying not that there are no taxes, but no new taxes?" asked Justice Steven González.

"That is correct," Tennyson said.

After the hearing, Tennyson said that although the state is expected to receive more money through the privatized liquor system, it is not because of new taxes.

"It's because there will be more sales, but essentially [the charges] are equivalent," she said.

Tennyson also said it was not too late for the state to return to the liquor business if the Supreme Court invalidates I-1183. The state still has its store leases, and most store employees will not be laid off until at least June 15.

Chief Justice Barbara A. Madsen asked about another issue — that voters were not told in the marketing for I-1183 that the measure would change wine-distribution regulations.

"It makes sense to align those regulations [with rules for spirits]," Tennyson answered.

In his rebuttal, Subit argued that if alignment was the aim, I-1183 should have limited wine and beer sales to stores measuring at least 10,000 square feet to match the rule for spirits sales.

David Burman, an attorney at Perkins Coie in Seattle who represents Costco and others, admitted the 10,000-square-foot rule might have been written differently.

Although the provision was intended to ensure it's "not too convenient to get liquor," Burman said, "it may not have been the best policy choice."

That is not the Supreme Court's purpose in looking at I-1183, he added, and the rule could be changed by the Legislature.

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