State Supreme Court upholds liquor-privatization measure
The ruling comes a day before private retailers in Washington are to take over the liquor business for the first time since Prohibition ended
Seattle Times business reporter
The state Supreme Court has upheld a voter-approved initiative privatizing liquor sales in Washington.
The ruling, made public Thursday morning, comes a day before private retailers are to take over the state's liquor business.
In a 5-4 decision, the justices upheld Initiative 1183, which dramatically transforms Washington's 78-year-old system for liquor from state-controlled stores to private industry.
"Tomorrow morning, we will have, for the first time in 78 years, spirits on the shelves of private retail stores in Washington," said Joel Benoliel, Costco senior vice president and chief legal counsel. "We're very gratified."
Opponents who filed suit to overturn I-1183 argued that it violated state rules by including a provision to set aside $10 million for public safety. The state's constitution requires initiatives to address only one subject, but the court disagreed with opponents that voters would have rejected the measure had the funding provision not been included.
Michael Subit, a Seattle attorney representing the opponents, said the court's decision ends a months-long legal battle.
"There's nowhere to go from here. On the issue of the constitutionality of a state statute, the Washington Supreme Court is the final word," Subit said.
A similar complaint filed in King County by labor unions likely will be dismissed, he said. "The Supreme Court has spoken, and that's the end of it."
The initiative, heavily backed by Costco, requires the changeover to take place Friday, June 1. About 1,640 retailers have applied to sell liquor in Washington, up from roughly 350 state-owned or state-contracted liquor stores under the old system.
Voters approved I-1183 last fall, allowing stores larger than 10,000 square feet and some smaller specialty shops to sell liquor.
As retailers prepare for the changeover, critics warn that consumers likely won't see the big price drops they might have expected from an industry that's no longer monopolized.
QFC is advertising 750-milliliter bottles of Ketel One vodka for $19.59. But that doesn't include Washington's 20.5 percent liquor sales tax and a $3.77 per-liter tax.
Counting both taxes, customers will pay about $26.40 for the vodka, roughly 50 cents less than at state-run liquor stores.
At Fred Meyer, a 750-milliliter bottle of Captain Morgan spiced rum will cost about $20.90 after taxes, compared with $19.95 under the old system.
The initiative also imposes 27 percent in fees on wholesalers and retailers to compensate the state for closing its lucrative liquor business. (The wholesalers' portion of the fee, now at 10 percent, drops to 5 percent in 2014, but retailers' 17 percent stays the same.)
Justice Charles Wiggins, in a 21-page dissenting opinion, said the fees imposed by I-1183 essentially are new taxes. While the constitution allows voter initiatives to create new taxes, he wrote, "the ballot title cannot misleadingly imply that it does not."
The ballot title stated that Washington would license private businesses to sell and distribute spirits and set license fees based on sales.
"The title of I-1183 refers to 'license fees' but then imposes 'license fees' that are actually taxes and would be understood by the public to be taxes," he said.
Wiggins also argued that earmarking new tax revenue for public safety is not inherently problematic, but it has "no rational relation to liquor privatization and may have been included only to win votes."
Justice Steven González, writing the majority opinion, countered that the measure's use of the word "fee" was not misleading or false, and that opponents' focus on the legal distinction between taxes and fees ignored the court's role "of construing the language of the initiative as the average informed voter would have read it."
González also said the public safety earmark was "germane to the general topic" of I-1183 and did not constitute "logrolling," the grouping of incompatible measures to win votes.
Amy Martinez: 206-464-2923 or email@example.com