Privatization of liquor reveals hidden costs

Voters approved Initiative 1183 (I-1183) last November, which allows privately-run businesses over 10,000 square feet to sell spirits. Many people celebrated it as a victory, including student Tawny Mayer.

“I was really excited about the idea of being able to buy spirits at the grocery store, rather than having to make an extra stop at a state-owned liquor store,” said Mayer.

Retail stores have been able to sell liquor since June 1. After the original excitement wore out, people began to realize there were hidden costs, such as the “sticker shock” customers now face at the checkout stand, as well as lost jobs. People worry other hidden costs will emerge, like underage drinking.

According to former Liquor Control Board Human Resources Consultant Melanie Schwent, “The prices posted on the stickers do not reflect the final cost of the product, due to the 20 percent spirits sales tax and the additional per-liter tax. Some stores have changed their stickers to reflect the final price, while others said they might consider doing so. Others said they have no intention of changing the labels at all, despite the high number of customer complaints.”

The initiative was the most expensive campaign in state history, said Schwent.

“I-1183 was dubbed the ‘Costco Initiative’ by members of the board and the media, because Costco was openly the largest backer of the initiative. Massive amounts of money were spent to campaign for or against the initiative,” she said.

A former employee of the LCB, who did not wish to be named said, “Supporters of [I-1183] said privatizing liquor would break the state’s monopoly, result in cheaper prices for consumers, and get the state out of the liquor business. Opposers believed that the initiative would mean a loss of revenue to the state, which would impact the state’s ‘general fund.’”

Previously, the state general fund earned about $300,000 to $600,000 each year from alcohol sales, said Schwent. Money from the general fund goes to “essential services” such as the police and fire department, she said.

“The state estimates that the initiative will eventually bring as much as $43 million to the state, but it will be awhile before we see that money,” Schwent said.

Schwent is one of thousands of LCB employees who lost their jobs after the initiative passed. According to Schwent, the board employed about 1,400 before, and now employs only about 400.

In a press release immediately after the initiative passed, Costco said it would love to interview and maybe hire LCB employees whose jobs might be affected by the new law.

“I haven’t heard of any LCB employees being hired by the various companies that made similar promises,” Schwent said.

Many people worry hard alcohol available at local grocery stores will lead to more underage drinking.

According to a former employee of the board who wished to remain unnamed, LCB enforcement officers compared how often state-run and privately-run liquor boards made illegal transactions, such as underage sales and sales to intoxicated individuals. The source said state-run stores scored a 90 percent compliance rating while the private run stores scored 75 percent to 80 percent.

“It makes buying liquor more convenient, but it’s disappointing that the price listed is not all-inclusive. It’s deceptive,” said Mayer, “I know the liquor store downtown has changed their price tags to reflect the actual cost of their products. I wish the local grocery stores would do the same.”

“My mother lost her job when this bill passed,” said a student who wished to remain unnamed, “My friends were all very excited when the bill passed. I don’t think voters realized how many people were going to lose their jobs just because [voters] wanted easier access to hard alcohol.”

“I don’t mind the ‘sticker shock.’ I like being able to buy alcohol at the store. It’s more convenient. I think people just need some time to get used to the new system,” said student David Dahlberg.

According to Schwent, Cowlitz and King County have both filed lawsuits challenging the law. “Though many citizens of Thurston County seem disappointed with aspects of the initiative, it does not seem likely that Thurston County will attempt to challenge I-1183,” Schwent said.