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Published: Tuesday, October 26, 2010, 12:01 a.m.

Effect of liquor initiatives sparks debate

Public officials are wary of losing revenue if Intitiatives 1100 and 1105 pass, but supporters say sales will offset losses.

City and county leaders are keeping a watchful eye on the ballot measures to get the state out of the business of selling hard liquor and let the private sector take over.
Initiatives 1100 and 1105 would both eliminate a source of hundreds of thousands of dollars for basic services, they say, and it's unclear whether either one would generate enough revenues to fully fill the gap. Ballots for the mail-in election are due next Tuesday.
“There are just too many unknowns at this point to know if privatizing is a good deal or not for the city,” said Everett Mayor Ray Stephanson. “We will deal with whatever voters decide.”
Both initiatives require the state close its liquor stores next year and sell its Seattle distribution warehouse and its inventory of booze.
Each initiative also ends the state's mark-up on the price per bottle of spirits, drying up a stream of revenues to cities and counties.
Last fiscal year, it amounted to $1.66 million for Snohomish County and $1.3 million for the city of Everett, according to figures from the Washington State Liquor Control Board.
Edmonds and Marysville each collected over half-a- million dollars and overall, $6.38 million found its way into communities in Snohomish County.
Those dollars get funneled through general funds used for day-to-day operations. Most get spent on public safety like police and fire services because those eat up the largest chunk of spending by local governments.
While elected leaders have been nervous about the potential effects, neither the county council nor any city council has formally opposed or supported them.
In Mountlake Terrace, which received roughly $264,000 last fiscal year, the City Council considered a resolution opposing passage of both measures Oct. 4 but didn't act.
“They wanted to use the public hearing as an opportunity to educate the community about the impacts,” City Manager John Caulfield said. “The impacts would be pretty significant. If we lose those revenues we'd have to cut or eliminate services.”
Proponents of both initiatives say fears of community leaders are unwarranted and estimates by the state of lost revenues are overblown.
Under Initiative 1100, the mark-up is gone while excise taxes remain in effect.
State budget analysts estimated that, over the next five years, the state would collect $76 million less in revenue and local governments would take in $180 million fewer dollars. That's based on receipt of the existing taxes, increased liquor sales and a mark-up of 25 percent — half the current level — in the private sector.
“We think the numbers thrown out there by the state are much higher than what they are going to be,” said Ashley Bach, spokesman for the Yes to 1100 campaign committee.
“Because there will be more people selling, there will be more tax revenues,” he said. And, he added, those who buy their liquor out-of-state because it's cheaper will now spend their money in Washington when prices come down and access is increased.
Under Initiative 1105, the mark-up and taxes are tossed out. It directs the Legislature to approve a new tax structure that will generate the same amount of revenue now collected plus another $100 million in the five-year period beginning Nov. 1, 2011.
But in the voter's pamphlet — and over the objections of initiative proponents — state budget officials estimate that if the initiative passes there will be $486 million less coming to the state and $205 million less to communities over five fiscal years.
Charla Neuman, spokeswoman for the Yes on 1105 campaign, said the measure's language makes clear the goal is to not hurt local governments.
“Your average voter knows that the private sector always operates more efficiently than government and Olympia is the last place you'd trust your money and will see through this bogus analysis,” she said.
City and county leaders said they understand the intent is for the Legislature to keep them whole but aren't sure if it's going to be politically doable before the measure would kick in a year from now.
Snohomish County Councilman Brian Sullivan said since the fiscal effects wouldn't begin to be felt until late next year, at the earliest, the county has time to prepare.
“We've begun doing our analysis now on whether the increase in sales will offset the lost revenue,” he said. “If we collect enough of an increase, we may be OK. I just don't know.”

Where liquor dollars go

Today, with each sale of a bottle of hard liquor, a little money is collected for the budgets of cities, counties and the state. It added up to nearly $360 million in the fiscal year that ended June 30, according to the Washington Liquor Control Board.
To see what each county received, go to http:// tinyurl.com/LiquorMoney.
For Snohomish County numbers, go to http:// tinyurl.com/Snohomish and for Island County, go to http://tinyurl.com/IslandCo.

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com.

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