YAKIMA, Wash. -- If either of the dueling initiatives to privatize liquor sales passes in the November election, already struggling local government budgets will take a substantial hit.

The city of Yakima, for example, stands to lose from $700,000 to $1.1 million a year in profit-sharing revenues and taxes depending on what voters approve. Yakima County stands to lose as much as $450,000.

Those are substantial reductions in this economy. The city of Yakima is already struggling with a projected $2.2 million deficit in next year's budget.

But the awareness level isn't yet that high.

"You know, I haven't read that much on it," Yakima City Councilman Bill Lover said last week. "We just got (an informational) packet, and when I was glancing at it, I was thinking I'm going to have to look at it a lot closer than I have."

With six initiatives and one referendum on the ballot this November, it's no wonder I-1100 and I-1105 are poorly understood by the public. Simply put, both would put the state out of the booze business.

Since the end of Prohibition, the state of Washington has had a monopoly on the distribution and sale of hard liquor, restricting sales to a limited number of stores -- roughly 300 statewide, including three in Yakima -- and imposing a markup that's grown over time to nearly 40 percent.

The state keeps 50 percent of the profit from sales as well as permits and licenses. Cities get 40 percent of the remainder. Counties get 10 percent.

The state and local governments also derive substantial revenues from a 20.5 percent liquor excise tax, essentially a special sales tax. The state keeps 65 percent of the proceeds and divvies the rest to cities and counties.

Backed by Costco, I-1100 would maintain the tax but repeal the profits on distribution and sales (since the system would be privatized and retailers would keep the profits).

The second initiative is considerably more complicated. Backed by distributors that historically have been shut out of the state, I-1105 would repeal both the excise tax as well as profit sharing, but recommends the Legislature enact a new taxation structure equivalent to the lost revenue plus an additional $100 million over a five-year period.

Here in Yakima, city officials are not taking an official stance on either measure but are clearly concerned about the consequences on already squeezed budgets. Still unknown is what the impacts would be on public safety and zoning regulations.

Rita DeBord, Yakima finance director, said the city would lose about $700,000 a year in profit-sharing revenues if the Costco initiative passes, and about $1.1 million under the second initiative if the Legislature doesn't step up.

Liquor revenue is dedicated to public safety, such as police, firefighters and courts, so the city would have to shift money around and find make new cuts to reduce the impact. The trouble is, public safety makes up roughly two-thirds of the city's general fund budget.

"It won't be pretty. It's going to be difficult, and the public will feel it," DeBord said. "But that is their decision to make."

Councilman Lover said he's not too worried about the impact if for nothing else for reasons of free enterprise.

He predicts that an increase in sales -- Yakima alone has more than 100 retailers now selling beer and wine that could be qualified to sell hard liquor -- would more than offset the shakeup to the current system.

The state brought trouble on itself with the 39 percent markup, he said.

"I bought a bottle of scotch after the (Aug. 17) primary for someone, and it must have been a while since I bought a bottle of anything, because it was probably about $40 more than what I thought I should have paid."

A recent limited survey by The Seattle Times showed some liquor prices in Washington to be about twice as much as a Costco store in California.

Lover predicted the public won't spend much time worrying about the fiscal impacts and will vote their self-interest, that is: cheaper liquor.

"Maybe we can privatize some more things," he added.

Fellow council member and conservative Rick Ensey said he too is still getting up to speed on the initiatives but isn't worried about the fiscal impacts.

He said voter unease with the state's monopoly on liquor coupled with increasing alarm over growth in public sector pay and benefits will ensure easy passage of the Costco initiative.

"The state has no business monopolizing an industry and never did," he said.

* Chris Bristol can be reached at 509-577-7748 or at cbristol@yakimaherald.com.

first number is current state-run liquor stores, second number is qualified retailers

Yakima (pop. 84,850) 3, 109

Sunnyside (pop. 15,340) 1, 27

Grandview (pop. 9,405) 1, 15

Toppenish (pop. 9,090) 0, 11

Selah (pop. 7,185) 1, 6

Union Gap (pop. 5,830) 1, 13

Wapato (pop. 4,555) 0, 9

Granger (pop. 3,065) 1, 8

Zillah (pop. 2,770) 1, 7

Moxee (pop. 2,525) 0, 1

Mabton (pop. 2,100) 0, 4

Tieton (pop. 1,195) 0, 2

Naches (pop. 765) 1, 13

Harrah (pop. 595) 0, 1

Source: Association of Washington Cities

Pushing the state out

Big distributors and retailers have two ways they want to push the state out of the liquor sales and distribution business:

The distributors (Initiative 1105): Take the state out of the liquor sales-and-distribution business and allow retailers to receive volume discounts on liquor.

The retailers (Initiative 1100): Do the above, plus allow volume discounts for retailers on beer and wine and eliminate other regulations such as "uniform pricing," which ensures all retailers pay the same price for alcohol, and a ban on manufacturers issuing credit to retailers. It also would allow retailers to buy directly from manufacturers rather than going through distributors.

Source: The Seattle Times