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Originally published October 19, 2011 at 9:39 PM | Page modified October 20, 2011 at 6:17 AM

Costco's $22M for liquor initiative sets record

Costco Wholesale has dumped another $8.9 million into its liquor privatization initiative, bringing its total contributions to more than $22 million. That shatters a state record for the most money spent by a single donor on a voter initiative.

Seattle Times business reporter

Top donors in I-1183 fight

Yes campaign — Total $22.7 million

Costco Wholesale: $20,880,660 cash; $1,641,077 in kind*

Washington Restaurant Association: $86,360 in kind

Safeway: $50,000 cash

Trader Joe's: $50,000 cash

Northwest Grocery Association: $30,373 in kind

No campaign — Total $11.7 million

Wine and Spirits Wholesalers of America: $9,394,000 cash

National Beer Wholesalers: $500,000 cash

Washington Beer and Wine Wholesalers Association: $500,000 cash

UFCW Local 21: $365,000 cash; $43,095 in kind

Beer Institute: $250,000 cash

*In kind donations include such things as labor, work space and other services

Source: Public Disclosure Commission

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Had enough of campaign ads? Brace yourself.

Costco Wholesale has dumped $8.9 million more into its liquor-privatization initiative, bringing its total contributions to more than $22 million, according to the state Public Disclosure Commission.

That shatters a state record for the most money spent by a single donor on a voter initiative.

Other donors have given less than $250,000 altogether to I-1183, which would put the state out of the liquor business and allow grocery stores to sell spirits.

A similar initiative from Costco was defeated last year, partly because the beer industry outspent it to fight the measure.

I-1183 spokeswoman Kathryn Stenger said the money is needed to combat lies being told by the opposition, which has raised $11.7 million, mostly from wine and liquor distributors.

Altogether, the Yes and No campaign donations make I-1183 the most expensive initiative fight in state history.

"It takes resources to combat that level of deceptiveness," Stenger said.

Opposition spokesman Alex Fryer called the I-1183 campaign's $22.7 million in donations "an astronomically high number."

"They're spending that amount of money to get across that there's suddenly no consequence to selling liquor in the state," he said.

Both sides are flooding the airwaves with ads, and more are sure to come.

These types of campaigns are hard for the public to decide, said Bill Allison, editorial director for the Sunlight Foundation, a nonprofit that works for transparency in government.

"If there were really truth in advertising, Costco would say, 'If we change the law, we'll make this much money,' and the distributors would say, 'If we keep the status quo, we'll keep making this much money,' " Allison said.

With corporate heavyweights battling on the airwaves, the public-policy debate is thwarted, he said.

"While [public-policy questions] are probably referenced in some of the advertising, the main players are looking at their bottom lines," Allison said. "The shame is that, as a result, the public is coming down to trusting the distributors more or trusting Costco more."

The latest spending by Costco and distributors comes after a long string of corporate fights on Washington ballots.

The previous single-donor record holder was the American Beverage Association, which last year gave $16.1 million to support I-1107, a measure voters approved that repealed legislative tax increases on candy, gum, bottled water and soda pop. The money wasn't all spent, and the association got about $755,000 back this year.

Last year, Costco spent $4.8 million on I-1100, an unsuccessful measure that also sought to privatize the state's liquor business.

From a shareholder perspective, Costco's recent spending makes sense, said Nell Minow, a board member at GovernanceMetrics International, a corporate-governance research firm.

"I'm assuming the return on investment is going to be considerable if they're successful," she said.

The two other initiatives on the November ballot also are funded largely by single donors. Kemper Freeman has given more than $1 million of the nearly $1.4 million raised in support of Tim Eyman's tolling initiative, I-1125. And the Service Employees International Union has contributed virtually all of the $1.7 million supporting I-1163, a measure that would require more training for long-term-care workers.

Only 17 individuals have donated money to either side of the liquor-privatization fight — eight people for a total of $742 on the Yes side, and nine people for a total of $23,777 (counting in-kind donations) on the No side.

Secretary of State Sam Reed said the trend toward special interests pushing initiatives is troubling.

Washington's initiative system began a century ago as a reaction to the railroad lobby's influence over the legislative process, he said.

Now special interests finance initiatives if they cannot get what they want in the Legislature, he said.

"That is a reversal that is really unhealthy for the body politic in the state of Washington," Reed said. "[The Legislature] needs to deal with these controversial issues, and should not have special interests going over their heads to the people."

With its new $8.9 million contribution, Costco has raised twice as much money as its opposition, based on Public Disclosure Commission reports as of Wednesday. Donations sometimes are not posted on the site until days after they are made.

No more major contributions are allowed before Nov. 8, the deadline for mailing or dropping off ballots. Campaigns can go in debt and ask donors to help pay it off after the election.

A rule of thumb in initiative politics is that you must outspend your opponent 2-to-1 to win, said Paul Berendt, senior vice president at the Seattle communications firm Strategies 360, which supported last year's failed liquor-privatization initiative from distributors.

"If Costco is serious about winning this, they have done the right thing," he said.

Berendt is not worried about the current campaign.

"If there were some true public interest being crushed, that would disturb me, but these are special interests slugging it out. I find it more interesting to watch than anything," he said.

Sheila Krumholz, executive director of the Center for Responsive Politics, a Washington, D.C.-based nonprofit research group that tracks money and politics, said companies might have information and expertise to share with the public.

But sometimes voters can pay a price for deciding arcane, insider disputes.

"It's a problem when big, private industries spend big money to duke it out, because too often the public is not at the negotiating table," she said. "And if they're not at the table, they're probably on the menu."

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

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