Washington Revise State Liquor Laws, Initiative 1105 (2010)

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The Washington Revise State Liquor Laws Initiative, also known as Initiative 1105, was on the November 2, 2010 ballot in Washington as an Initiative to the People, where it was defeated. The measure would have closed all state liquor stores and licensed private parties to sell or distribute spirits. Additionally it would have revised laws concerning regulation, taxation and government revenues.^[1]

According to reports I-1105 supporters filed signatures with the Washington Secretary of State on Friday, July 2.^[2] Supporters filed a total of 358,525 signatures, enough to allow a 3 percent random sample check. According to the secretary of state on July 23, of the 10,935 signatures sampled, 9,193 or 81% were accepted. The rejections, state officials said, were because signers were not registered voters. The error rate was 18.55%.^[3][4]

Aftermath[edit]

• According to a December 2010 report, Rep. Gary Alexander and Sen. Tim Sheldon planned to reintroduce legislation to reform the Liquor Control Board. Alexander favors making Washington's system more like that Oregon's. In other words, liquor stores would be made private and would be under contract with the state. Sheldon, on the other hand, proposes closing state liquor stores and the state distribution center. Franchise agreements would then be auctioned to the highest bidder.^[5]

• On May 21, 2011 a bill to privatize the state's wholesale liquor distribution system was approved by the Senate following a 31-14 vote. If approved by the House, the bill would require the office of Financial Management to seek proposals from companies interested in taking over the state's distribution system.^[6]

Election results[edit]

Washington Initiative 1105 (Liquor)
Result		Votes	Percentage
d No		1,634,516	65.04%
Yes		878,687	34.96%

Election results via: Washington Secretary of State (dead link).

Text of measure[edit]

Title[edit]

The ballot title read:^[1]

Summary[edit]

According to the description prepared by the Washington Secretary of State:

This measure would direct the liquor control board to close all state liquor stores and to license qualified private parties as spirits retailers or distributors. It would require licensees to pay the state a percentage of their first five years of gross spirits sales; repeal certain taxes on retail spirits sales; and direct the board to recommend to the legislature a tax to be paid by spirits distributors. It would revise other laws concerning spirits.

Support[edit]

Supporters of both I-1105 and I-1100 argued that the proposals would allow for lower prices, greater convenience, in addition to cutting government costs.^[8]

Contributions[edit]

Reports in August 2010 revealed that supporters had collected an estimated $2.2 million in campaign contributions.^[9]

According to reports in June 2010 Washington Citizens for Liquor Reform received two contributions - one from Young's Market Company (dead link), a Los Angeles-based spirit and wines distributor, and another from Odom Corp., a beverage distributor with offices in Bellevue. Young's Market contributed $300,000, while Odom gave $100,000.^[10][11]

Below is a chart that outlines major cash contributions to the campaign in support of I-1105:^[12].

Opposition[edit]

Opponents of I-1105 and I-1100 argued that state and local governments would lose millions of dollars in liquor tax revenue should voters approve the proposed measures. Additionally, they argued that the measures may lead to an increase in minors illegally buying alcohol and more drunk driving incidents.^[8]

• John Guadnola, executive director of the Washington Beer and Wine Wholesalers Association said, "We think they're terrible public policy. Whether or not you believe in privatization, this is a horrendous way to do it." In response to arguments that they were afraid of losing part of the market share, Guadnola said they would be willing to compete with sellers but were concerned the proposed measures may eliminate regulations on hard liquor.^[8]

• Washington Governor Chris Gregoire was opposed to both I-1100 and I-1105. "Right now, to do what is being proposed by those initiatives would deplete our coffers by about $300 million dollars… so I'm a no vote on both of them. I can't afford the loss of revenue. Do I think that we should reform liquor? Yes. And I would expect the legislature to pick up where the voters left off and still do something important in that area. But at this point in time I just have to go with what I've seen are just heartwrenching cuts to human lives, and I just can't afford to say yes and lose $300 million," she said.^[13]

• The Vancouver City Council voted to oppose both I-1100 and I-1105 on October 11, 2010. The resolution passed with 4 in favor and 2 opposed. The city of Vancouver estimated that if I-1100 was approved the city would lose $1.2 million a year. If I-1105 was approved, city officials estimate a loss of $2 million per year.^[14]

Contributions[edit]

In late August 2010 the Washington Beer and Wine Wholesalers Association and the National Beer Wholesalers Association each contributed $1 million to Protect Our Communities, a coalition in opposition to both I-1100 and I-1105.^[8]

Below is a chart that outlines major cash contributions to the campaign in opposition of I-1105:^[15].

Reports and analyses[edit]

OFM impact report[edit]

On August 11, 2010 the Office of Financial Management (OFM) released a financial impact report should Initiative 1100 or Initiative 1105 be approved by voters on November 2. Contrary to an earlier report by the state auditor, the OFM predicted that the state could lose hundreds of millions of dollars. Specifically, the report estimated that I-1100 would reduce state revenues up to $277 million over the next five years and I-1105 could reduce revenues by $730 million. However, the OFM also reported that both measures could increase liquor sales by about 5 percent.^[16][17]

Supporters of the initiatives argued that the OFM's report did not account for additional revenues paid by increased liquor sales.^[16]

The OFM's report on the fiscal impacts of I-1105 can be read here.

Budget and Policy Center[edit]

The Washington State Budget and Policy Center released an analysis of the several Washington 2010 initiatives, including I-1100 and I-1105. According to the study, the impact of I-1105 to the state's general fund over a 5-year period was estimated at between $513 million and $547 million. The measures, according to the study, could "impose long-term social costs associated with heightened consumption of hard liquor and other alcoholic beverages."^[18][19]

The report can be read here.

Media editorial positions[edit]

See also: Endorsements of Washington ballot measures, 2010

Opposition[edit]

• The Seattle Post-Intelligencer was opposed to I-1100 and I-1105. In an editorial, the board said, "Washington's cumbersome state liquor monopoly is overdue for reform...But the peoples' representatives -- our Washington State Legislature -- ought to do the job. Hence, seattlepi.com recommends that voters reject Initiatives 1100 and 1105, liquor privatization measures on the November ballot. 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."^[20]

• The Seattle Times was opposed to I-1105. In an editorial, the board said, "The Nov. 2, 2010, ballot also has Initiative 1105. It would also close the state liquor stores, but it would keep the anti-competitive rules in beer and wine, and end the state monopoly in spirits by giving it to a private cartel. The Times recommends a yes vote on I-1100 and a no vote on I-1105."^[21]

• The Stranger was opposed to the proposed initiative. The editorial board wrote, "It gets rid of both the state's liquor markup and taxes, meaning that if Eyman's I-1053 passes—that's the one that effectively prevents the legislature from raising taxes—the state would lose all liquor-tax revenues for at least two years at a time when money is tight. That would devastate some good programs. It would also require a distributor middleman for all booze sales forever—essentially shifting the monopoly from the state to the hands of private distributors. So vote no on I-1105."^[22]

• The Pacific Northwest Inlander was opposed to I-1100 and I-1105. In an editorial, the board said, "To begin with, common sense tells us that expanding the availability of liquor could cause more problems related to alcohol abuse. That alone is a good reason to question the wisdom of these measures. The state has a duty to regulate certain, potentially dangerous businesses. But additionally, by putting the state out of the liquor sales business, as initiatives 1100 and 1105 would do, we would be punching a hole in our state budget to the tune of hundreds of millions of dollars...As with other ballot initiatives this season, I-1100 and I-1105 are really about massive corporations attempting to pry open new profit centers."^[23]

• The Yakima Herald-Republic opposed I-1105. "Initiative 1105 is less of a deregulation measure and more geared toward the distribution end. It is bankrolled by two large distributors. Like I-1100, it would close all state liquor stores. It would require retailers to purchase hard liquor through distributors, contrasted with I-1100, under which retailers could buy directly from manufacturers. It would institute a fee based on gross sales to be paid by distributors. To us, putting a middleman -- the distributor -- into state statute ensures someone else will always take a financial swig of the booze, just as the state does now. This is another reason to go with 1100," said the editorial board.^[24]

• The Bellevue Reporter supported I-1100 but opposed I-1105. In an editorial, the board said, "I-1100 would let retailers buy directly from manufactures. This is where I-1100 and I-1105 differ. I-1105 would keep the middle-men in liquor sales – the distributors – in place, along with the costs they add to the price. Some argue that distributors help the state's small wineries get their wines in stores...The state doesn't need an expensive distribution system to protect what amounts to a alcohol cartel. And it doesn't need to be in the retail sales of alcohol at all. Vote "Yes" on I-1100 and "No" on I-1105."^[25]

• Publicola opposed I-1100 and I-1105. "Both of these privatization measures are written to favor big businesses at the expense of consumers, public safety, and basic state services. If voters really feel we need more liquor stores open longer hours, they should put pressure on the legislature to reform our current system. But they should reject both of these poorly written, ill-timed proposals," said the editorial board.^[26]

• The Kitsap Sun opposed the measure. "...our board favors I-1100, which would not require “middle man” distributors between liquor manufacturers and businesses. It also may provide for better enforcement of under-age restrictions and other laws by the state Liquor Control Board. And do not vote for both initiatives; if both are approved, they’d go to the Legislature and the courts. Vote “yes” on 1100 and “no” on 1105," said the board.^[27]

Polls[edit]

See also: Polls, 2010 ballot measures

• A July 7-8, 2010 poll by SurveyUSA/KING5 revealed that an estimated 65% of polled voters "trust state-run liquor stores to sell liquor responsibly," while 56% said they trusted private corporations. The survey did not directly ask about proposed initiatives I-1105 or related initiative I-1100. According to reports, the poll had a 3.4 percent to 3.4 percent margin of error, depending on the question.^[28][29]

• A September 9-12, 2010 poll of 500 likely voters by Elway Poll revealed that 41% supported the proposed measure, while 33% were opposed and 26% were undecided.^[30][31][32]

• An October 7-10, 2010 poll of 400 likely voters by Elway showed that 36% supported the proposed measure, while 45% opposed it and 18% were undecided.^[33]

Legal action[edit]

Ballot title challenge[edit]

See also: Washington Privatize State Liquor Stores, Initiative 1100

On June 1 supporters of a competing initiative - Washington Privatize State Liquor Stores, Initiative 1100 - filed a ballot title and summary challenge. According to the filed challenge the ballot language was too vague. I-1100 supporters pointed to the fact that the language did not reflect that in addition to privatizing state liquor stores the language did not specifiy thet I-1105 would repeal the existing alcohol tax and require the legislature to create a new tax. Charla Neuman, spokeswoman for I-1105, said the other side was "just playing games" by filing a challenge on the last day they were allowed to.^[34]

Additionally, the complaint went on to argue that the ballot title, written by the attorney general, did not explain what "qualified" meant when explaining that the liquor control board would have to license "qualified private parties" to sell and distribute liquor. Another complaint pointed to the lack of the phrase "hard liquor" in the description. I-1100 argued that both proposed initiatives should include the phrase "hard liquor." If changed, both initiatives would be "put on the same playing field."^[35][36]

The challenge was heard in court on June 9.

Court ruling[edit]

The case was heard by Judge Thomas McPhee on June 9. Judge McPhee agreed that the term "hard liquor" should appear in both I-1105's and I-1100's ballot language. However, the judge rejected all other complaints by I-1100 supporters. Shortly following the judge's ruling, I-1105 supporters said they planned to print new petitions with the changes immediately.^[37][38]

Similar measures[edit]

I-1100[edit]

See also: Washington Privatize State Liquor Stores Act, Initiative 1100 (2010)

In addition to I-1105 another initiative, I-1100, was also proposed relating to privatizing state liquor stores. However, unlike I-1100, I-1105 prices liquor licenses based on the volume of liquor sold. I-1100, on the other hand, does not include price controls.^[35]

If both measures had been approved by voters, according to attorneys in the state's Elections Division and the Attorney General's office, the question would go to the Washington Legislature and the courts. With a two-thirds vote, the legislature, could find a way to adopt the two laws or adopt one and reject the other. However, both measures would remove the state from the liquor business and allow retailers to sell "hard alcohol."^[39]

Path to the ballot[edit]

See also: Washington signature requirements and 2010 ballot measure petition signature costs

In order to place the proposed measure on the 2010 ballot organizers were required to collect a minimum of 241,153 valid signatures by July 2. According to reports I-1053 supporters filed signatures with the Washington Secretary of State on Friday, July 2.^[40][41][42]

Supporters filed a total of 358,525 signatures, enough to allow a 3 percent random sample check. According to the secretary of state on July 23, of the 10,935 signatures sampled, 9,193 or 81% were accepted. The rejections, state officials said, were because signers were not registered voters. The error rate was 18.55%.^[43][44][45]

See also[edit]

Suggest a link

• 2010 ballot measures
• Washington 2010 ballot measures

Related measure[edit]

• Washington Privatize State Liquor Stores Act, Initiative 1100 (2010)

Articles[edit]

• Initiative petition deadlines arrive in Oregon and Washington
• Washington liquor initiative challenges similar liquor initiative

External links[edit]

• I-1105 Full text
• 2010 Election Voters Guide (dead link)

Campaign links[edit]

• Washington Citizens for Liquor Reform (support)

Additional reading[edit]

Local impact[edit]

Editorials[edit]

• The Seattle Times, "The state of Washington should get out of the liquor business," April 1, 2011
• PTLeader.com, "Editorial: The perplexing case of two liquor initiatives," September 15, 2010

Footnotes[edit]

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