Thursday, May 27, 2010
The Legislature should have taken action to get the state out of the booze business.
The current recession provided the perfect opportunity to make the shift from state-run liquor stores to the private sector. We are convinced that if the sale of liquor were licensed to private industry the state could make just as much money through taxing sales and help the economy in the process.
Yet, lawmakers just sat on the idea.
Now, retail giant Costco has gotten behind an initiative that goes around the Legislature to allow retail liquor sales. Initiative 1100 would allow solid businesses currently selling beer and wine to also sell liquor, and it would eliminate price controls and allow volume discounts. Costco Wholesale stores in the state will begin collecting signatures next week to qualify the measure for the ballot.
This initiative, if approved, is clearly going to give the edge to bigger retailers. It should also allow the consumers to save some money on their alcohol purchases -- at least those making purchases at big volume retailers.
Is this good public policy?
Maybe. Although there could be some clear negatives. Small retailers, for example, aren't going to be too happy.
In addition, it is not certain what will happen to the employees at the state-run liquor stores or the revenue that is generated. The state operates more than 160 stores, and contracts with 155 private-run stores in smaller towns. This generated $655 million in the last two-year budget cycle.
Pragmatically, the state can't afford to give up that revenue. The issue of a possible increase in alcohol consumption and the impact on society might also be a concern.
Had lawmakers crafted a plan looking at all aspects of privatizing liquor sales, the various concerns could have been addressed.
Generally, writing laws through the initiative process is not the best approach. The give and take of the legislative process usually results in better laws with fewer unintended consequences.
Still, this initiative might still be worthy of support, although we are not yet ready to make a recommendation.
The proponents, however, are already campaigning.
Costco and Sharon Gilpin, a political consultant who put together Initiative 1100, said in a Seattle Times' article the state could raise liquor taxes to make up the loss.
And, added Costco's chief legal officer, Joel Benoliel, even with higher taxes, consumers would pay less for liquor because of increased competition and the elimination of price controls.
Given Costco's huge customer base, this initiative is going to the ballot -- and very likely could become law.
If lawmakers don't like it, they have nobody to blame but themselves. They passed on the opportunity to guide the transition from state-operated liquor stores to private retailers.