Liquor sales ballot measures worry local governments

Two November ballot measures that would end the state’s monopoly on liquor have stirred up concerns that local governments would lose millions of dollars at a time when they already face sharp budget cuts.

Each of the dueling campaigns for initiatives 1100 and 1105 argues that it offers the responsible choice to keep public coffers intact.

Both initiatives would end the distribution of liquor profits to state and local governments, which they receive from permit and license revenue and sales at state-owned liquor stores.

But the measures differ in how much liquor tax revenue cities would still receive. Initiative 1100 preserves the liquor excise tax; Initiative 1105 eliminates it in favor of a new tax.

Meanwhile, local governments are left to wonder about the uncertainty.

Officials from Pierce County and some of its large cities say the impact on them could be significant starting as early as 2011, based on current and past collections:

 • Tacoma received in 2009 about $1.4 million in profits and $1 million from taxes.

 • Lakewood is budgeted this year to receive $419,273 in profits and $250,375 in taxes.

 •  Puyallup is budgeted this year to receive $275,507 in profits and $188,919 in taxes.

 •  University Place received $216,000 in profits and $155,000 in taxes last year, the City Council was told during a briefing Monday night.

 •  Pierce County estimated the financial loss in the coming years. If Initiative 1100 passes the county is projected in 2011 to lose between $744,149 and $797,398, depending on whether the liquor markup is 25 percent or 45 percent. If Initiative 1105 prevails, it is calculated to lose more than $1.6 million.

Most of the money local governments receive is deposited in their general funds, which pay for basic services such as parks maintenance and police and fire protection.

This potential hit to budgets has become a major argument raised by opponents to call for the defeat of both initiatives.

The opposition campaign, Protect Our Communities, funded primarily by beer and wine wholesalers and labor unions, cited a nonpartisan analysis by the state Office of Financial Management that estimates I-1100 would cost local governments between $180 million and $192 million between 2011 and 2015. The analysis projected I-1105 would cost governments even more: between $205 million and $210 million during the same period.

Sandeep Kaushik, a campaign spokesman, reiterated that passing either initiative will result in cuts to services, higher taxes or both.

“Whatever people may think of privatization in theory, now is not the time to pass measures like these, which is going to lead to more service cuts to basic services that people rely on,” he said.

Kaushik said OFM’s analysis underestimated the financial impact on local governments because they’ll incur additional enforcement costs with more businesses selling liquor.

However, both initiative campaigns faulted OFM’s analysis, saying it didn’t take into account revenues from increased sales and revenue from business and occupation taxes assessed by some communities.

The backers of I-1100 preserved the liquor tax out of consideration for public agencies that rely on that revenue, said Ashley Bach, a spokesman for Yes to 1100. which is primarily funded by large retailers including Costco and Safeway

“We’re not trying to be punitive to government in this initiative,” he said. “Selling liquor is not an essential government service.”

In the case of I-1105, financed by two distribution companies, campaign spokeswoman Charla Neuman said the OFM analysis didn’t factor in the significant amount of additional revenue she said would result. The initiative recommends that the liquor control board make a recommendation to state lawmakers about a rate for a new tax that would keep local governments whole and generate at least an additional $100 million in revenues over a five-year period.

There’s nothing in the initiative that requires lawmakers to pass the tax, however. In addition, as voters weigh the two initiatives, they’re also mulling an initiative that would require a two-thirds vote of state lawmakers to raise taxes.

Randy Lewis, the city of Tacoma’s government relations officer, said the Legislature had a difficult time approving a tax increase to help close a budget gap last session, even when the Democrats had a solid majority in the House.

“A two-thirds vote on anything in the Legislature is difficult to do, especially on a tax, especially in a difficult year,” Lewis said. “I don’t know how they get there.”

Bach agreed. But Neuman expressed no such doubts.

“Of course, they’re going to tax liquor,” she said. “They love sin taxes.”

Christian Hill: 253-274-7390
christian.hill@thenewstribune.com