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Mix of liquor initiatives add to Island County's budget woes
The passage of either liquor-related initiative on the ballot this November could rub up to $265,000 worth of salt into Island County’s extensive budget wounds.
Island County Budget Director Elaine Marlow recently alerted county commissioners about the effects that state Initiatives 1100 and 1105 would have on the county’s bottom line. From $170,000 to $265,000 a year would be lost, depending on which one passes.
Commissioner Helen Price Johnson said it may mean even more budget trimming in addition to what’s already planned for the county.
“The liquor initiatives on the November ballot, if passed, will create a significant hit to Island County revenues, as well as other jurisdictions,” Price Johnson wrote in an email. “This is because the state liquor profits are distributed per capita to Washington’s cities and counties. The theory, as I understand it, is that alcohol consumption has fiscal impacts to local governments and this is one way to help offset those costs.”
The county’s share of liquor profits amount to about $170,000 a year, plus $95,000 a year from liquor excise taxes.
Initiative 1100, known as the Costco initiative, would do away with the liquor profits that are shared by state and local governments. The profits come from a uniform markup of liquor.
Competing Initiative 1105 would cut out both liquor profits and the liquor excise tax. For Island County’s current expense fund, a total of $260,000 a year would be lost under I-1105.
And Island County isn’t alone. Oak Harbor could lose up to $293,000 a year, Coupeville could lose $24,000 and Langley could lose as much as $14,000 a year.
The news is neither good nor timely for county commissioners, who are in the process of cutting $2 million from the current expense fund.
Since 2008, commissioners have already cut $4.2 million, or 20 percent of the budget, and laid off more than 50 workers due to declining revenues.
Marlow acknowledged that the county could gain a little of the loss back with increased sales tax revenues on the sale of liquor, since more people may buy spirits if they’re available at convenient places like grocery stores.
Also, she said the county could create a business license for liquor sales.
Still, Marlow said the possible financial gains would make up only a very small part of the loss.
Regardless, liquor would likely be a whole lot cheaper for consumers if either initiative passes.
Brian Smith, a spokesman for the Washington State Liquor Control Board, said the state currently has the highest liquor tax in the country. The total state tax on liquor is 20.5 percent on hard liquor and 17.1 percent on strong beer. On top of that, the state’s markup on liquor is 51.9 percent.
Also, grocery stores and other retailers could profit from selling hard liquor.
“I would like to see the government get out of the liquor business,” said Jim Rich, who was at the Oak Harbor liquor store Thursday to buy a bottle of sherry for cooking.
Beyond the fiscal impacts, I-1100 would close state liquor stores, allow private retailers to sell hard liquor, repeal bans against volume discounts and eliminate the state’s tiered liquor control system, which segregates the manufacturing, distribution and retailing of spirits.
I-1105 would also close liquor stores and allow private retailers to sell hard liquor. Unlike I-1100, it would price liquor licenses based on volume of liquor sold. It would repeal certain taxes on retail spirits sales, but direct the liquor control board to recommend to the Legislature a tax to be paid by spirits distributors.
Costco supports I-1100; liquor distributors support I-1105.
The liquor store in Oak Harbor will close under either initiative. Assistant manager Kimber Williams said that four people would lose their state jobs.
“I love my job,” she said. “I have a great job with benefits.”
The four other liquor stores on Whidbey — in Coupeville, Freeland, Langley and Clinton — are contract stores, which means private owners contract with the state to run the stores. Smith said these business would be able to continue running if an initiative passes, but they would have to compete with grocery stores and possibly other businesses under the new rules.
Pam Smith, the owner of the store in Coupeville, said she may continue to run the store as a private business for a couple of years — and then sell it — if an initiative passes. She said the biggest difference she sees for small-town customers is that the liquor selection will be limited without the backing of the state.
There’s a good chance that one or both initiatives will pass. A SurveyUSA/KING5 poll in August showed that a majority of people supported both measures.