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Voters will see liquor-warehousing bid before deciding on privatization

Post by Jordan Schrader / The News Tribune on Aug. 22, 2011 at 9:18 am with No Comments »
August 22, 2011 9:18 am

Just before the Nov. 8 election to decide whether Washington should privatize its liquor stores, voters will learn how much the state might be able to save from a competing proposal.

First, about that alternative proposal. It’s the idea of leasing out the state’s liquor warehouse and distribution system. State lawmakers today will review the proposed requirements for companies bidding on the lease, as drawn up by Gov. Chris Gregoire’s budget office.

You can comment. See the proposed Request for Proposals at www.ofm.wa.gov/rfp/default.asp and then e-mail RFP.Comments@ofm.wa.gov by Thursday or attend today’s public hearing of the House Ways and Means Committee, at 1:30 p.m. in Olympia’s J.A. Cherberg Building.

What’s next: Once companies bid, Gregoire’s office can either reject all of the bids or choose a winner Nov. 2.Other bidders would have the chance to appeal, so the contract wouldn’t actually be signed until after the election. That gives voters a chance to cancel the whole process by approving the full privatization envisioned by Initiative 1183.

Gregoire’s budget office estimated I-1183 would bring in an extra $401 million to $480 million over six years to state and local governments. Those big numbers raise the bar for bidders on the lease, who hope to influence the initiative debate by promising bigger savings.

The Washington Beverage Co., which pitched the idea to lawmakers of the partial privatization, is optimistic it can leap that bar. Its estimates this year called for a $300 million up-front payment to the state, with the possibility for either more gains or losses for the state over future years – but its upcoming bid is a different story.

“I think any bid that’s submitted is likely to be significantly different from the numbers that were being batted around beforehand,” said Sandeep Kaushik, a spokesman for Washington Beverage, “and I think there’s a strong reason to assume that the bids that come in offer a better deal for the state than what we’ve seen from the privatization folks who are pushing 1183.”

The contract would prohibit the deal from resulting in a loss to the state.

Still, one major difference is likely to make the proposal less enticing than the original scheme to provide an immediate $300 million Band-Aid to the state budget. Under the law calling for the contracting, any large up-front payment would be placed into a trust and paid out over years.

Read more here or see tomorrow’s paper.

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