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Originally published August 10, 2011 at 8:46 PM | Page modified August 10, 2011 at 8:47 PM

Liquor initiative to add revenue, analysis finds

A Costco-backed voter initiative that would push Washington out of the liquor business could increase state and local government revenues by tens of millions of dollars a year, according to a state budget analysis.

Seattle Times business reporter

quotes well im voting for it just like i did last time. this has been way past overdue Read more
quotes This is a no-brainer; lowers costs for the state, increases revenue, and is a benefit... Read more
quotes I would rather buy my liquor at Costco, Trader Joe's, Safeway, Albertson's, QFC, Fred... Read more

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A Costco-backed voter initiative that would push Washington out of the liquor business could increase state and local government revenues by tens of millions of dollars a year, according to a state budget analysis.

But the state's Office of Financial Management said it's hard to estimate the impact of Initiative 1183 precisely, because retail prices would determine how much the state collects in fees and taxes.

The estimate says that, on average, state liquor revenues could increase as much as $42 million a year and local government revenues by as much as $38 million a year over the next six years.

The additional money does not include an estimated one-time gain of $36.4 million from the state's sale of its liquor-distribution center, or the one-time cost of $5.3 million to pay off financing for improvements to that center in 2007.

New continuing state costs would be about $26,400 a year — incurred by the Department of Revenue, because it would be collecting liquor taxes from new private-market taxpayers.

Any cost savings from the closure of about 165 state-run liquor stores would be offset by the elimination of income from the state's liquor markup, according to a state analyst.

Roughly 160 additional liquor stores now operate under contract with the state and would be allowed to stay open under I-1183.

Last year, two similar voter initiatives could have cut revenues to state and local governments by $51 million to $146 million, according to budget office estimates.

The difference with I-1183 is the establishment of significant new fees — 17 percent of all liquor sales on retailers and 5 to 10 percent of sales on distributors — that act as replacements for the state's current markup.

In fiscal 2010, the state's 325 liquor stores generated $370 million for state and local governments.

Opponents to I-1183 dislike that it would increase the number of stores selling spirits.

The state's analysis found the number could climb to about 1,400 stores. That estimate is a fraction of what was expected from last year's initiatives, because I-1183 limits liquor sales to retail stores with 10,000 or more square feet, with some exceptions.

The analysis estimates that the greater access to spirits would increase liquor sales by about 5 percent. That's based on growth experienced in Alberta, Canada, after it converted from state to private liquor stores.

A group called Protect Our Communities, which opposes I-1183 and is funded mostly by unions representing the state's 650 liquor-store clerks, also decries the possibility of higher liquor costs.

It called the new fees "a hidden tax increase on consumers."

The state's analysis found that private retailers might mark their spirits up as much as 72 percent initially, in part to cover the cost of I-1183's new fees. It also said that liquor could be marked up as little as 52 percent, which is what the state markup is now.

Costco has provided the bulk of the $2.3 million behind I-1183; Trader Joe's kicked in $50,000 a couple of weeks ago. So far, the opposition has raised $29,380.

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

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