Just before the Nov. 8 election to decide whether Washington should privatize its liquor stores, voters will learn how much the state might save with a competing proposal.
The Legislature is seeking bids from companies that could take over the state’s liquor warehouse and distribution system. Gov. Chris Gregoire’s budget office has drawn up a request for bids and is expected to either reject all of them or recommend a winning bid 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.
The Costco-backed initiative, not other potential bidders, may be the biggest rival for the Washington Beverage Co., which pitched the idea to lawmakers of leasing out the warehouse.
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, numbers that raise the bar for bidders who hope to influence the initiative debate by promising bigger savings. Still, Washington Beverage is optimistic it can surpass even its own earlier prediction of paying the state $300 million upfront with the possibility of more gains or losses in future years.
“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.”
STATE COULDN’T LOSE
The contract would prohibit the deal from resulting in a loss to the state. It must deliver a “positive financial benefit to the state and local government,” according to the budget office’s proposal. That standard is too vague, some lawmakers said at a hearing Monday.
Greg Hanon, a lobbyist for Costco, provided some proposed criteria to lawmakers. When tallying up savings from the lease, the retailer says, state officials shouldn’t count savings that state government could make on its own.
One major difference between the original scheme to provide an immediate $300 million Band-Aid to the state budget and the proposal under review is likely to make any bid less enticing. Under the law calling for contracting out the warehouse and distribution system, any large upfront payment would be placed into a trust and paid out over years.
Rep. Cary Condotta, a member of the advisory group of lawmakers who is reviewing the proposed requirements for bids, is skeptical the savings could match Costco’s proposal.
“I don’t see any way they’re going to come out with anything that exciting,” the Wenatchee Republican said.
Spearheading the Washington Beverage push is Tom Luce, a Tacoma business consultant. He has partnered with an investment firm that was involved with a similar privatization of Maine’s distribution system.
Supporters say it’s a way for the state to save money without risk or permanent loss of assets, and without shedding the jobs of the people who deliver booze. Opponents, and supporters of I-1183, say the warehouse lease would just replace a government monopoly with a private monopoly.
The budget office calls for a 10-year lease of the warehouse, but says that’s negotiable. Washington Beverage had pitched a 20-year lease, and Rep. Ross Hunter, a Medina Democrat on the advisory committee, said a shorter period would make a lease less attractive to potential bidders.
Susan Johnsen of the budget office said a decade off seemed like a reasonable point to re-evaluate the lease and matches what was done in Maine.
JUST BEFORE ELECTION
Condotta was glad any deal wouldn’t be signed before Election Day and short-circuit I-1183, but he said it’s improper for the budget office to recommend a winning bid just before the election.
Earlier, the announcement was planned for Dec. 7.
Condotta said the earlier release might confuse voters who haven’t yet returned their ballots into thinking the alternative plan is a done deal, which smacks of manipulation aimed at trying to upset the initiative.
But Kaushik said voters have an interest in knowing about all the options for savings before they decide on I-1183.
The budget office’s Johnsen said the timetable is based on how long it takes to put together a bid request, not election calculations.
Jordan Schrader: 360-786-1826
jordan.schrader@thenewstribune.com
Group gives $3.6 million to fight liquor change
The coalition fighting the Costco-backed liquor-privatization initiative looks like it has found a benefactor.
The Wine and Spirits Wholesalers of America contributed more than $3.6 million this month to the Initiative 1183 opposition, which also includes unions, public safety groups and small grocery stores.
Alcohol distributors were also the main source of money that helped defeat a 2010 privatization measure, but it was mostly from the beer industry – which also has members opposing I-1183 but hasn’t yet spent money.
Authors of this year’s initiative say it was carefully drawn to avoid affecting beer. But it does allow wineries to bypass distributors and sell directly to restaurants or retailers like Costco, a provision that has drawn support from a group of local wineries but opposition from the distributors.
On the supporters’ side, Costco has provided most of the $2.4 million raised.
Jordan Schrader, staff writer
HOW TO COMMENT
To read proposed requirements for companies bidding to take over state liquor warehousing and distribution, go to www.ofm.wa.gov/rfp/default.asp. To comment on them, send an email to RFP.Comments@ofm.wa.gov by Thursday.
SAMPLING PROGRAM
Five of the 30 state liquor stores participating in a yearlong tasting pilot program approved by the Legislature this year are in Pierce County. The stores are at 4814 Point Fosdick Drive N.W. in Gig Harbor, 2627 N. Pearl St. in Tacoma, 3208 S. 23rd St. in Tacoma, 3811 S. Meridian St. in Puyallup and the Tahoma Market at 6200 Pacific Highway in Fife.
The program begins Sept. 1. Stores are permitted one tasting event per week. The tastings will be from 4-6 p.m. Fridays or Saturdays. Upcoming tastings will be posted at the 30 stores, as well as at www.liq.wa.gov/stores/events. For a list of other stores that are part of the program, go to www.liq.wa.gov/stores/ tasting-event-list-stores.
The state Liquor Control Board considered sales volume, locations and space as it selected pilot stores, according to a news release.
Brian Sandford, staff writer
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