Liquor Privatization Still has Hope in Washington

As my colleague Angela Logomasini wrote in a post earlier today, voters in Washington State vetoed two measures that would have privatized liquor sales in the state, making the purchase of liquor easier and cheaper for both business and consumers. However, they did approve initiative I-1107, repealing the recent increases on sales taxes for soda, candy, and gum — the so called “grocery tax.”

Fear Wins:

Why the difference? Candy, gum, and soda are no more essential than liquor to an individual’s life, yet I-1107 received widespread support and I-1100 (the privatization initiative with the greatest amount of votes) could not get enough votes to pass. The difference was all in the advertising.

The campaign for I-1107 painted the increase in taxes on soda, gum, and candy as a harmful action on general consumers during a hard economic time.

The Columbian recommends a “Yes” vote on Initiative 1107, which would repeal the tax increases. We do so for three reasons: our belief that an economic crisis is the worst time to increase taxes, the unpardonable secrecy that ushered these tax increases to reality, and the abject silliness nestled in the details of the legislation.

…How any legislator can vote to increase taxes during a time of high unemployment, widespread business failures and record high home foreclosures is beyond us

By showing the possible harm that an increase in taxes could do in an already stressed financial environment, supporters of the initiative convinced enough voters to prevent the tax increases. For liquor privatization, however, proponents of I-1100 attempted to portray to residents the benefits of privatization for small businesses in the state.

Those arguments, however, were far less effective than privatization/initiative opponents who claimed that privatization would result in even more budget shortfalls, job loss, and increased social ills.

Even those outlets that are, supposedly pro-privatization of liquor, recommended a “no” vote on I-1100 and I-1105 due to fear of the financial and social repercussions.

The public interest, and public coffers, stand to lose if “reform” takes the form of an initiative or initiatives placed on the ballot and promoted by special interests that stand to make (many) bucks.

The buck should stop, instead, with the Legislature. It is better positioned to evaluate revenue losses to state and local government and impacts on Washington’s winemakers and microbrewries. And consideration must be given to public safety problems ginned up when convenience stores, neighborhood markets and gas stations sell booze until 2 a.m.

The argument privatization supporters should have used and voters didn’t hear was the direct harm caused by not removing the 75-year-old monopoly on liquor sales. Yes, big box stores, restaurants, and small businesses too would benefit from the ability to bypass wholesalers and purchase liquor at wholesale prices directly from producers of liquor, but it would also make liquor cheaper, more available and reduce burdens on local businesses — all of which would result in immediate savings and increased options for residents. In addition, privatization would have also reduced the amount of money spent by the state on the business of purchasing liquor, renting space for state stores, hiring and managing workers, advertising, etc.

The Bright Side:

Even though both initiatives failed, I-1100 came close, really close to passing. As the Seattle Post Intelligencer put it:

The Legislature has not acted, but two initiatives on the ballot should light a fire and kindle another old truism: There’s nothing like a hanging in the morning to focus the mind.

In the wake of such a close call with ballot-decided privatization the legislature will very like take action in the next session to, at least in part, privatize liquor sales in Washington.Many other state legislatures will be keeping their eyes toward development on the western front.

A bit of a rant:

When any state gives up its monopoly on an industry it will lose some direct funding. But, that should not be an argument for continuing to allow the state to strong-arm its way into an industry where it doesn’t belong. No matter how many taxes the government takes or how many industries it takes over there will never be enough money to sate a government with an ever-inflating budget.  The real solution is to reduce the need for funds by cutting non-essential programs, such as selling liquor to residents.