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I-1183: State control doesn’t equal safety

Letter by Brad Slusher, Tacoma on Oct. 25, 2011 at 12:52 pm with 53 Comments »
October 25, 2011 1:37 pm

Re: “We’re better off without I-1183’s liquor privatization” (Our View, 10-23).

Based on statistics published by the National Highway Traffic Safety Administration, for the years 1998 and 2008, Washington State ranked 42 out of 51 (including D.C.) for the highest percent of alcohol related traffic fatalities.

Out of those 41 states with a lower percentage of alcohol related traffic fatalities, 15 have state controlled liquor and 26 don’t. There is no evidence whatsoever that state control equals lower alcohol related fatalities, nor any evidence that it reduces availability to minors.

The fact that Costco was the largest contributor to I-1183 and will profit by its passing is immaterial. The idea that availability will somehow increase consumption is also purely supposition. If there were gas stations on every corner, would gasoline consumption suddenly skyrocket?

Also, based on the source material for the CDC study quoted in the editorial, the American Journal of Preventative Medicine (Vol. 37, No.6) also states, “Direct studies of the effects of policies changing density on alcohol-related public health outcomes have not been conducted.” Once again, we have purely anecdotal evidence to support the claims that getting the state out of liquor sales will have a negative effect.

The bottom line is that if I-1183 is passed, the state is out of a business it should never have been in, retailers have access to new revenue streams, the cost to consumers goes down allowing them to stretch already tight budgets, and state revenue goes up to cover record shortfalls. Where’s the down-side again?

Leave a comment Comments → 53
  1. Voltaire says:

    Where is the proof that costs will go down, aside from campaign promises?

  2. Capybara91 says:

    Next time Costco wants to buy itself an election, give me something I can use like an industrial-sized bag of weed. I can get booze at any bar til 2 am. I can buy wine at 7-11 anytime. I don’t need Costco to sell me booze. If you’re not inordinately slow, you’ll figure out that corporations and Gov Eyman have bought the initiative process in Washington. And it has been to the detriment to our budget and everyone but the people who funded the initiative. Safety isn’t even an issue. Just follow the money.

  3. Does Brad work for Costco?

  4. stumpy567 says:

    Let’s go ahead and villify Costco for wanting to make a profit. Do you think the liquor companys are making a profit selling to the state at monopoly prices now? Where do you think the funding for the AGAINST campaign is coming from stupid? Not the State!!!! Wake up, Does it make sense to have 328 State funded stores and employees when we taxpayers need pay nothing and get the same bottle for a lot less on the private market. Go to your friendly STATE run liqour store and ask to have one bottle of an item they don’t stock ordered and see how it goes. They will get anything you want if you buy a case of it!!~!!
    How’s that for service?

  5. commoncents says:

    Please elaborate on how costs to the consumers go down? With the state requiring a 22-27% cut of the pie..it means that at best prices will be the same and more likely they will increase in order to satisfy the private market’s profit margins. Remember, the state makes a profit off these stores…you are losing that profit and replacing it with a flat 22-27% cut of sales.

    And stumpy – the same thing would happen if you went to Safeway and ordered something that they don’t ordinarily stock. At least with the state you can go online and see where it is stocked so you can go purchase it yourself. Try that with Costco or Safeway or your local 7-11.

  6. LarryFine says:

    Where is the proof that we’ll be “less safe”… other than the commercials ?

  7. commoncents says:

    we won’t be less safe, we won’t get our booze cheaper, the state will NOT be getting more money…all that will happen is that we will be getting out of a business that is currently profitable for the state.

  8. Peeannoplaya says:

    “safer” is a relative term. “cost” is dollars and cents.

    changing horses in the middle of a wild river makes no sense or cents

  9. Having lived in states without state-controlled liquor stores: Califorina, Missouri. States with state-controlled liquor stores: Washington, Idaho. And in a state with, moving away and living there when they got rid of them: Iowa. I have a fair amount of experience.

    In states without and the one that dropped the state monopoly, the product is consistently cheaper than in WA and ID (and IA before they dropped it). Large chain stores tend to expand separate liquor sales areas – hiring new staff (as well as new construction). There is no evidence that these states suffer from more underage drinking or drunk driving.

    I find it amusing that some of the regulars who regularly champion Costco for their treatment of the employees are now painting them as some evil corporate entity that is interest solely in (gasp!) increasing their profits.

  10. LarryFine says:

    A rare occasion has occured… I agree with my friend bB. I, too, have lived in other states that do not have a monoply on hard alcohol. It is considerably cheaper anf the stats of alcohol related “stuff” is the same over all.

  11. Looktheresanother1 says:

    most states with private liquor sales have income tax. tossup

  12. Wrapper98439 says:

    The state just gave away about $10 million in the Seattle School mess. I guess they don’t need the money. Seeing that many taxpayer funded agencies are using taxpayer funded resources to fight the measure with flat out lies, we need to get rid of some state employees.

  13. Government is a horribly INefficient operator of everything it does, and should not be controlling a task that can be done better by private retailers at a lower cost. People really need to educate themselves on this issue. I am voting YES on 1183, because the State itself has said it will Make More Money on existing sales levels if the program is privately operated. What they dont say is the system is so entrenched and mired in bureaucracy, the legislature can never unwind it themselves; it has to be the people who force the issue.

    I dont like the government running what should be private enterprise. If you have not been paying attention, if 1183 does not pass, the State has already accepted bids to sell off and privatize its distribution center and trade one monopoly for another.

    Yes, there will be more places selling liquor (most of them already sell beer and wine, and your groceries too – but nobody pays attention to that part). I wont drink a drop more if I can buy hard liquor in addition to or instead of beer or wine at Walgreens, Safeway, or Fred Meyer. I like having that choice, and I like private operators competing and setting their own deregulated prices. Costco is heavily invested simply because they sell private label products the State wont stock in their antiquated, dirty stores.

    If you are voting Yes – tell your friends and get those extra votes, it’s going to be close. If you are voting No, feel free to convey intelligent real issues – not made up ones, lies about New minimarts on every corner selling liquor in brown bags to gangs of kids, and teenagers running around in hot rods with half gallons of vodka under the seats (which – by the way, they seem to do already just fine under the status quo).

    We are a responsible populous in WA. We can, and will, adapt just fine to the freedom of choice that is only two weeks away.

  14. stetsonwalker says:

    “most states with private liquor sales have income tax. tossup”

    That statement is both ignorant as well as untrue!

  15. AlabamaGeorge says:

    Since only 7 states don’t have income tax, the odds are quite true

  16. 6 of the 9 states w/o income taxes have privatized sales of alcohol

    The 19 control or monopoly states as of 2005 are:
    Alabama (All liquor stores are state-run)
    Idaho (Maintains a monopoly over sales above greater than 16% ABV.)
    Iowa (Does not operate retail outlets; maintains a monopoly over wholesaling of beverages greater than 6% ABV.)
    Maine (State-contracted to private businesses for commission)
    Michigan (Does not operate retail outlets; maintains a monopoly over wholesaling of distilled spirits only.)
    Mississippi (State-contracted liquor stores)
    Montana (State-contracted liquor stores, modeled after the ALGC)
    New Hampshire (Beer and wine sold at supermarkets & convenience stores; spirits and liqueurs are sold only in state-run liquor stores.)
    North Carolina (Beer and wine can be sold in supermarkets and convenience stores; other spirits must be sold in state-run liquor stores.)
    Ohio (Licenses businesses to run liquor stores for a commission. Beverages under 21% ABV may be sold in supermarkets)
    Oregon (Beer and wine can be sold in supermarkets and convenience stores; other spirits must be sold in state-run liquor stores.)
    Pennsylvania (In the process of opening retail outlets inside some supermarkets.[2]
    Utah (all beverages over 3.2% ABV are sold in state-run stores)
    Vermont (Liquor stores are state-contracted and licensed)
    Virginia (Beer and wine at supermarkets, all liquor stores are run by the state)
    Washington (Beer and wine sold at supermarkets, gas stations, department stores, etc.; spirits and liqueurs are sold only in state-run or state-contracted liquor stores.)
    West Virginia (Does not operate retail outlets; maintains a monopoly over wholesaling of distilled spirits only.)
    Wyoming (State-contracted stores)

    States without an individual income tax

    * Alaska – no individual tax but has a state corporate income tax. Like New Hampshire, Alaska has no state sales tax. Alaska has annual Permanent Fund Dividend for all citizens living in Alaska after two years. [7]
    * Florida – no individual income tax[8] but has a corporate income tax (at a 5% rate). The state once had a tax on “intangible personal property” held on the first day of the year (stocks, bonds, mutual funds, money market funds, etc.), but it was abolished at the start of 2007.[9]
    * Nevada – has no individual or corporate income tax. Nevada gets most of its revenue from gambling and sales taxes.[10][11]
    * New Hampshire – has an Interest and Dividends Tax of 5%, and a Business Profits Tax of 8.5%. A Gambling Winnings Tax of 10% went into effect July 1, 2009 and was repealed May 11, 2011. [12] New Hampshire has no sales tax.[13]
    * South Dakota – no individual income tax but has a state corporate income tax on financial institutions.[citation needed]
    * Tennessee has a 6% tax on income received from stocks and bonds not taxed ad valorem.[14] In 1932, the Tennessee Supreme Court struck down a broad-based individual income tax that had passed the General Assembly, in the case of Evans v. McCabe. However, a number of Attorneys General have recently opined that, if properly worded, a state income tax would be found constitutional by today’s court, due to a 1971 constitutional amendment.[15]
    * Texas – no individual income tax or corporate income tax. In May 2007, the legislature replaced the franchise tax with a gross margins tax on businesses (sole proprietorships and some partnerships were automatically exempt; corporations with receipts below a certain level were also exempt), which was amended in 2009 to increase the exemption level. The Texas Constitution places severe restrictions on passage of an individual income tax and use of its proceeds.
    * Washington – no individual tax but has a business and occupation tax (B&O) on gross receipts, applied to “almost all businesses located or doing business in Washington.” It varies from 0.138% to 1.9% depending on the type of industry.[16][17]
    * Wyoming has no individual or corporate income taxes.[18]

  17. LF – I too have found it interesting that I am aligned more with the folks I tend to argue with on this issue.

    There are a very few areas where government monopolies make sense: fire, police, sanitation, water, electricity. The sale and delivery of Alcohol, not being in any way essential for the public well being, is not one of them.

    But then, Publico has demonstrated his support for Pot prohibition due to his personal experiences with friends and family members and KARDNOS has revealed his need to quit drinking over two decades ago so it isn’t that surprising that they are supportive of pseudo-prohibition.

    But, as I have pointed out elsewhere, there is an inherent conflict of interest for the State to attempt to control a substance that it has a financial interest in selling. State-monopolies over liquor sales inherently lead to corruption.

  18. AlabamaGeorge says:

    What qualifies as “private”?

    I note that there are private contractors in Washington. Does that mean that Washington, without a sales tax has private sales?

    There is no question that the State has made serious money at selling liquor, I’ve demonstrated this fact in the recent past.

    I’m left to wonder what the state is going to do to replace that money.

  19. Looktheresanother1 says:

    I can’t speak for anyone else, but I subscribe to this phrase –

    “AA makes no stand on whether beverage alcohol is good or bad. Temperance movements and prohibition tried to label the product as being evil. AA does not.”

  20. commoncents says:

    Not sure if the cheaper argument flies as the state is ensuring that they will get their cut (27%) which leaves Costco and others with only half of the normal markup. Costco typically limits their markups to maximum of 15% which falls within the cheaper category. However, they do that by limiting the brands or varieties of what they sell. In order to maintain the product availability that we currently enjoy they will have to increase the markup to account for lower sales on the individual brands.

    Something has to give here…either fewer options or lower costs.

  21. LarryFine says:

    Stop it bB ! You’re making sense and I agree with you… :)

  22. daggercat says:

    Beerboy, what boogie man crawled out from under your bed? Has there been a huge coruption scandal involving our WSLCB that I didn’t read about. And I think control of movement and pricing IS important to public safety. And commoncents, you are right about the options being reduced. That shelf space will now become too valuable to keep anything that doesn’t sell quickly.

  23. Not sure if the cheaper argument flies as the state is ensuring that they will get their cut (27%)

    Ummm…..unless something has changed in the past year, the State currently gets considerably more than that:

    The state receives revenue by imposing a 51.9 percent markup on all spirits sales and taxing these sales at a rate of 20.5 percent plus $3.77 per liter. The combination of the markup and per liter tax results in an effective tax rate of $25.73 per gallon, the highest rate in the nation.


  24. concernedtacoma7 says:

    Cat- you admitted earlier in the thread your true motivation is job security, cost to the public be damned.

    Travel to a state where booze is not under state control. I travel frequently, and your concerns are not valid.

  25. daggercat says:

    Concerned, are you serious? Perhaps you have’nt seen many of my arguements against this initiative. I’ve lived in Washington State all my life. I LOVE it here. Cost to the public be damned? I AM the public! I find it strange you refer to alcohol as booze. Kind of sophmoric. I don’t care how it’s done in other states. Until we can have intelligent people sit down and find the best way for the state to turn control of alcohol sales over to private enterprise, what we currently have in place works best for our state. If you uncork the dam, it’s incredibly difficult to put the cork back.

  26. Capybara91 says:

    I will keep drinking until the economy improves. This initiative contributes nothing toward that end. I also know that they’ll keep pumping millions into another initiative, re-numbered and re-worded, if they fail this time. Eventually, we’ll get sick of the ads and let it pass. Same old tired song.

  27. daggercat says:

    By the way, I’ve never insinuated my true motivation is job security. I care about the state I live in. I don’t want hard alcohol to be seen as just another product to sell to people, because I’ve seen a lot of the negative effects.

  28. daggercat says:

    Capy, I’m hoping if we defeat them again, we can pursue them in court for filing frivolous initiatives should they try this again. Kind of reminds me of domestic abuse.

  29. Capybara91 says:

    I’m just sayin, don’t make it seem like it’s some sort of victory for our safety or democracy. Just come out and admit it’s the cynical, greedy ploy that it is. “Vilify Costco”. Gimme a break. Like they don’t have well-paid teams of PR pros to deal with that. Nobody gave a rat’s keister about state-run stores until Costco came along. As for the govt being involved in alcohol, govt has ALWAYS been involved in alcohol, except during Prohibition. Then it was Capone’s “free enterprise.”

  30. daggercat says:

    Well said Capy. How Washington State deals with sales of alcohol was not an issue until Costco decided it should be.

  31. concernedtacoma7 says:

    Cat- “i work in distribution, and we are looking at mass layoffs if this passes” Yeah, it’s all about the public.

    Who brought forth this initiative is irrelevant. Why is the state running a non-essential business for a profit?

  32. LarryFine says:

    Me thinks a poster(s) is posting to his-self…

  33. Since the WA initiative process requires garnering enough signatures to place it on the ballot, the idea that this is somehow solely an action of Costco is absurd.

  34. LOL, trying to use Costco as a negative? Costco is an amazing company, offers competitive wages, great benefits, 401k participation, etc. 95% of the no on I-1183 money is from the distributors. This is a joke that will only appeal to the most ignorant of the electorate. Unfortunately in this state, that may be the majority :). The state needs to exit non-essential services. We have massive shortfalls, and they continue to be much bigger then let on by the state. These state jobs, pensions, and healthcare costs need to be cut. Get the state out of the liquor business. These laws are “blue-laws”. Our state just in the past few years started opening some of the liquor stores on Sundays???? Huh???? Sorry if that means you lose your cush job with the state Dagger. I know…..over the top pay, benefits, pensions, healthcare, sick leave, etc. etc. Sorry, the state is broke, and we just have to be realistic about what the state should and shouldn’t be wasting our tax dollars on….

  35. Add one more to the list, bBoy. I’m thinking “yes” on 1183

  36. commoncents says:

    bB – the 27% that I was referring to was the state’s cut of the sales if 1183 were to pass. The state is currently getting 51% of every bottle sold. They will be taking that down to 27% through 2014 and 22% after that. Calling it a license fee doesn’t change the fact that it’s a markup. That combined with the markup of the private sector will bring it near current rates. Costco by rule limits markup to 15% so it should effectively be 9% cheaper. But that will only hold if they limit selection. Smaller entities and safeways of the world have a higher markup and that will make the cost to the consumer fairly equivalent. Sure – it gets cheaper if the state doesn’t charge hefty licensing fees but that’s a huge amount of revenue lost to state and local governements and that’s not a good thing to do in this economy to satisfy the political principles of a few individuals.

  37. wadsbrau says:

    I’m voting “yes”. My 2 sons aged 19 and 21 think its stupid for the state to sell liquor. And they’re new to this whole thing and don’t drink. I agree with beerBoy and others.

    There is one thing that I don’t understand though. Why do the “no’s” think that Costco will be the major retailer in this state? According to Costco’s Website, they have 20 stores in Washington. The state estimates approximately 1400 stores will apply for a license. Costco seems to me to be a rather small minority in this. Voting no because Costco will be getting higher profits is ignorant.

    As far as variety of products go, has anyone considered the possibility of a large private store selling only Beer, Wine and Liquor. We already have stores like that that sell Beers from around the world. Or wines. There wil definatley be more varieties available.

    Cost of liquor. Ignorance again here. You have no idea how much the state is paying wholesale for each brand of liquor. This initiative will allow retailers to purchase the best wholesale price they can find. Retail stores can sometimes offer products on sale at a loss that is recovered from other sales in the store. This is a way that they get customers to come in the store.

  38. AlabamaGeorge says:

    If the state isn’t going to lose money, how do the prices go down?

    The story of “competition” is about as real as the competition for gasoline pricing. There is no reason to lower prices when people’s consumption isn’t going to change drastically.

    There a markup that is going to no longer be in the state’s hands if this iniative passes. That’s a net loss.

  39. AlabamaGeorge says:

    wadsbrau – I’m going to suggest that your sons are not very informed on the money that liquor sales brings to the state. For all the talk about the state being broke, I don’t understand the desire to remove a great revenue source.

  40. wadsbrau says:

    AlabamaGeorge – They dont care about that. The state will still get thier money. Do you know that tobacco and alcohol in WA state are taxed at some of the highest rates in the country. Do you seriously think that down the road, the legislature won’t impose further taxation on private liquor sales? They will. Furtermore, they will be getting the tax revenue without the overhead of running stores and paying employees. Folks, you need to look at the big picture. Do the research for yourselves instead of believing ads you see on TV. Also look into how retail businesses work.

  41. AlabamaGeorge says:

    wadsbrau – there isn’t much more to discuss when someone says “I don’t care about that”.

    The state will make a great target for retailers to point blame at taxes for the cost of liquor as they enjoy the profits that were once enjoyed by the taxpayers. That is how retail businesses work.

    Alabama out.

  42. wadsbrau says:

    AG – Wow, really? Nothing in that post was factual or the truth.

  43. wadsbrau says:

    AG – “If the state isn’t going to lose money, how do the prices go down?”

    Lower wholesale cost.

  44. commoncents says:

    wadsbrau – the state can’t impose a tax increase without a supermajority vote which won’t happen under current political system. Any new tax now needs to be voted on by the citizens. No longer can we say the state will still get theirs. These things don’t live in a vacuum like they sponsers like to portray them. Given the current atmosphere – do you honestly think the citizens will vote to increase liquor taxes?

    Now tell me this…assuming that a new tax could win voter approval? in the meantime, how does the state come up with the lost revenue? And there is lost revenue..and a lot of it.

  45. daggercat says:

    TMell, I don’t work for the state.

  46. Peeannoplaya says:

    wadsbrau seems to think that Costco and other retailers are going to give up a profit that is already built into liquor prices

    there’s a bridge for sale somewhere

  47. wadsbrau says:

    @Peeannoplaya “Costco and other retailers are going to give up a profit that is already built into liquor prices”

    What in the world does that mean? This makes no sense.

    How do any of you know any of the accounting the state does for each and every liquor store. Where is it written that the state makes money on the stores or loses money on the stores? I’ve lived here my whole life and have never heard anything regarding the actual finances and acounting for each and every liquor store. There are basically 2 types of voters. those that believe what the see on TV, and those that vote according to loginc and common sense. I happen to be one of those that if someone were to bring up a compeling deal breaker for not voting yes, i would change my mind. Those of you arguing against have zero proof that any of those bad things that you claim will happen, will actually happen. I feel sorry for folks like that who are afraid of change, who cannot show any proof of thier side, such as in a proper debate.

    It wasnt that long ago that most people were fed up with what the state does with our money. Now it seems that they need the liquor sales money (sales tax, liquor tax, wholesale markup etc) from us to do good things. There is nothing like a good waffler.

  48. wadsbrau says:

    @commoncents – Lost revenue? Where do you get your information from regarding money made from the sale of liquor? I understand that the state gets much $$ from the taxes we pay on liquor. Where do you get the figures of “profit” made from the sale (markup as in any store selling a product) above and beyond the cost of leasing the stores and paying all of the employees. The ones that work at the stores and ones in the background distributing the liquor, paying for liquor board and all the rest of the red tape that goes with it. I would like to see those numbers.

    Remember, were not talking about the taxation (which will still exist if I-1183 passes).

  49. Peeannoplaya says:

    wadsbrau – if you go to the WSLCB website all of the financial reports are there. Your assessment that the markup covers only the cost of doing business is incredibly wrong.
    If you really want to know, the figures are there and I’m guessing you have a calculator.

  50. took14theteam says:

    “Since the WA initiative process requires garnering enough signatures to place it on the ballot, the idea that this is somehow solely an action of Costco is absurd.”

    That is the same mentality by those opposed to any Eyman initiative. Eyman doesn’t sign every petition, nor does he pull the lever on election day for every vote cast. Yet everyone blames him.

    Maybe the “99%” needs the blame…..

  51. commoncents says:

    wadsbrau – it comes from the financial statements of the liquor control board. Per the 2010 annual report: SALES from alcohol – not lottery or taxes but sales revenue = 870 million — Cost of Goods Sold = 455 million — Retail Operating Expenses = 119 million

    End result = 300 million returned to state on alcohol sales alone…That’s 1/3 of a billion dollars. That’s a lot of money.

    I didn’t read into the detail to see if it included the warehousing but even if you increased retail operating expenses by 25% you are only looking at 150 million.

  52. commoncents says:

    anyone who “blames” Costco for this is crazy. Costco is in business to sell products to others. They want to increase their product line to include a lucrative and stable market. Why blame them for that. At least they are obvious about their intent and desires and it is actually part of their normal business strategy. I’m voting no, but I certainly don’t blame Costco for making the effort.

    That being said, the fact that they are basically funding the effort is disconcerting. And, one has to wonder why Safeway and the others are only minimally participating? Perhaps they know something we dont?

  53. daggercat says:

    wadsbrau, I do actually hope to change your mind. As commoncents states, you can look up real facts that the state profits from operating liquor stores. Now, the other debate is getting the state out of this business, because it appears there are a lot of people who think this should not be the states business. The negative consequences of voting for this hastily written initative, is that it doesn’t allow the state to work at dismantling the system while keeping the three tier system of distribution in place. The three tier system works well for Washington State because it creates jobs and helps control the cost of alcohol. Sorry if alcohol is more expensive in this state, but it’s one of the products we choose to put a higher tax on so we can provide revenue to the state for all the things we want the state to take care of. If we don’t get the taxes from alcohol, we’ll have to get it from something else. I didn’t hear too many people complaining about our prices until this initiative was introduced. The main focus seems to be on hard alcohol, but the previous initiative was about buying wine directly. This initiative quietly allows that to happen, while the hard alcohol carrot is dangled in everyones face. Our state is fairly unique in its ability to support many small wineries. I firmly believe that in order to take the state out of the business of selling hard alcohol, serious disscussion needs to take place. And that will take time. Not a rushed initiative. I don’t want to think we are being worn down. I still vote NO. Thanks for listening.

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