I-1183 liquor ads go under the microscope

October 19, 2011

With proponents and opponents of I-1183 (to end the state liquor monopoly) shattering state campaign contribution records for a ballot measure, the airwaves are about to see a binge of ads for and against the proposal. Hopefully future ads will fare better in truthfulness than some of those run to date.

The Seattle Times has done a good job of separating fact and fiction from the current ads. Here is a sampling of their findings:

The claim: The campaign against Initiative 1183, which would privatize the state's liquor business, is running a television spot that says the initiative has "giant loopholes deregulating our liquor laws, allowing almost 1,000 gas stations and minimarts to sell hard liquor in every community across Washington, where police stings prove they sell to one out of four minors." A Seattle Times analysis judges the ad to be mostly false.

What we found: Mostly False
Stings by the Washington State Liquor Control Board show that almost one in four minors who try to buy alcohol from private establishments, such as restaurants, grocery stores and convenience stores, gets away with it. So that part of the claim is true.

But there's considerable doubt about whether almost 1,000 gas stations and minimarts would sell liquor if voters approve I-1183 in next month's general election. The number could just as easily be zero. That part of the claim is mostly false, and given that the information about minors is attached to it, the ad's overall assertion becomes mostly false.

The claim: A television spot for Initiative 1183, a measure backed by Costco Wholesale that would privatize the state liquor system, says it would "bring more competitive prices to consumers."

What we found: Mostly True

To borrow an idea from Bill Clinton, it depends on what you mean by "competitive."

I-1183 would get the state out of the liquor business and open it up to stores measuring at least 10,000 square feet, with exceptions for underserved areas and existing state stores. Currently, 328 state-run and -licensed stores sell liquor; the state estimates that number would jump to 1,428 if I-1183 is approved by voters in November.

So, liquor would be available in more places. No one disputes that.

The question is whether "more competitive prices" means consumers paying less for booze. The I-1183 campaign says they would, although it has not said that explicitly in ads.

The pro-campaign is basically right. Some prices would fall, and maybe a lot of prices, given how heavily skewed the state would be toward large chains with big buying power.

The Seattle Times also did this compare and contrast of what a bottle of liquor might cost if I-1183 is adopted.

Here are some of the other critiques the paper has offered on the campaign to date:

Here are the editorials from across the state that have run to date:

PRO

CON

Washington Policy Center has long recommended getting the state out of the liquor business and allowing the competitive private sale of liquor under regulation by the state. This change would allow state officials to shift their efforts from managing retail sales to exclusively enforcing the state’s liquor, public health and public safety laws.

Here are our Key Findings on I-1183:

  • I-1183 would effectively end the state’s 78-year-old monopoly on liquor sales.
  • The Office of Financial Management estimates I-1183 would increase state revenues by more than $200 million, and add $200 million (approximately) in local government revenues over the next six years.
  • I-1183 limits those outlets that can sell liquor to stores of 10,000 or more square feet, with limited exceptions.
  • If I-1183 is enacted, Washington would still rank among the top five states for restrictive access to liquor sales, moving from second to fifth most restrictive, and would be the most restrictive non-monopoly control state in the West.
  • I-1183 would repeal SB 5942 and the proposed leasing of the state’s liquor distribution warehouse to a single private provider, allowing for full competition in the liquor distribution market.

Initiative 1183 provides voters with another opportunity to decide whether state government should continue to have monopoly control over a retail business enterprise and a particular commercial commodity, or if it is time to end Washington’s 78-year-old liquor monopoly. Unlike last year’s Initiative 1100, Initiative 1183 restricts the size of retail stores that could apply for a liquor license. That means far fewer private liquor stores would be allowed to open under Initiative 1183 than would have been allowed under Initiative 1100.

Also, revenue estimates showed passage of Initiative 1100 would have resulted in a loss of revenue for state and local governments, while estimates show passage of Initiative 1183 would provide hundreds of millions of dollars in new revenues for state and local government to help fund public services.

Should voters again reject repealing the state’s liquor monopoly it is likely this reform idea will be dead for the foreseeable future and the state will continue with the liquor-control system largely as it was created in the 1930s. If Initiative 1183 is adopted, however, voters will have shown they embrace the idea of focusing government efforts on strict enforcement of the public health, safety and drinking-age laws related to liquor sales, while leaving the business of distributing, pricing and selling liquor products to the competitive marketplace.

A copy of our full analysis of I-1183 is available here.