Spirit sales end for state liquor board; work doesn’t
Washington’s liquor control board will be working well past the closure of state liquor stores June 1 to transition the liquor business to a private system – with training new licensees and selling the distribution center among the items on its to-do list.
Voters decided to privatize the state’s liquor sales and distribution with the passage of Initiative 1183 last November.
“This initiative was an extremely aggressive time frame,” said state liquor board director Pat Kohler. “We’re shutting down a $1 billion business in less than six months.”
Those six months are up in June, but the licensing and enforcement divisions will keep going “full-throttle,” said liquor board spokesman Brian Smith.
There will be about 1,400 stores selling spirits under the new system – about four times the current number, though many of the new liquor retailers already sell beer and wine.
The goal is for enforcement officers to stop by every store within a year, said Capt. Lisa Reinke, who oversees enforcement in Southwest Washington.
Their initial work will include reminding licensees of basic regulations, and assisting stores with product placement to help retailers prevent theft by minors.
“We want to go visit them when it’s not an enforcement action,” Reinke said. “... We want to have a rapport with them where we’re working together.”
But that could take a while. Some officers, who also police restaurants and other venues that sell alcohol, have more than 300 premises assigned to them. In King County, some officers have more than 600, she said.
The agency has several vacancies in its 300-member force that it hopes to fill over the next several months, but doesn’t have the money to add positions.
“We have to see which way we are pulled – if we need more staff to deal with the issues, if we need more training, if we need to take a harder stance and do more compliance checks. ... We’re hopefully going to make our way through it,” Reinke said. “We’re new to this, too.”
The number of outlets selling hard liquor could grow – and become more far-flung – once the board defines “trade area” for the purposes of allowing smaller stores to sell spirits in unserved areas.
A public hearing for that process should be held in July, and qualifying retailers should be able to apply for licenses by the end of the summer, Kohler said.
The agency also has to find time to restructure the organization, which is losing more than 900 positions – mostly workers employed at state liquor stores – in the transition.
As required by I-1183, the state auctioned off 167 state stores last month. So far, all but one of the successful new owners has opted to purchase the store inventory as well, Kohler said.
The plan is for those stores to be inventoried and ready for the new owners to operate June 1, though some have said they don’t think they’ll be ready for business by then.
“There’s a lot of work behind the scenes to finish the closure of the stores,” Kohler said. Among the tasks are finalizing details with the new owners and archiving reams of business records from the state stores. The state also plans to re-auction 18 of the stores on May 24 because the successful bidders haven’t paid up.
Then there’s getting rid of the state distribution center in Seattle – recently appraised at $30 million, plus $1.5 million for the equipment inside. It is expected to be put on the market in June.
The agency first offered the building to other government and public agencies, but didn’t get any takers.
The proceeds from that sale and the $31 million that the board could receive from the auction of the state liquor stores will go into Washington’s liquor revolving fund.
The fund will distribute about 52 percent of the auction proceeds – along with other excess funds – to the state general fund and the remainder to local governments this June.
The state budget assumes $17 million from the sale of the distribution center will go to the state general fund under that model. Olympia would receive about $133,000, and Tacoma would get roughly $567,000 based on population. Counties would also receive some of the funds – about 20 percent of the local government allocation.
But if the center is sold after July 1, the general fund gets all the money and local governments get none. Lawmakers passed legislation this spring that freezes the amount local governments receive from the revolving fund on that day forward.
Budget writer Rep. Ross Hunter, D-Medina, said the effect of that law on the distribution center proceeds was unintentional, and that he would have no interest in spending the extra money that could end up in the general fund. Instead, the state would bank the money to pad its slim ending fund balance.
What the additional revenue won’t be used for, at least not in the near term, is hiring more liquor enforcement officers. I-1183 didn’t provide for any expansion of their ranks.
That’s not to say the liquor board won’t ask for more resources at some point.
“They (the officers) are taking on a lot, and with the resources we have, we need more officers,” Reinke said. “And we’re going to be trying for that in the future.”