I-1107, Liquor-Privatization Measures Would Harm Local Services

Initiative 1107, along with the two liquor privatization measures, I-1100 and I-1105, would take a heavy toll on core local services in Washington state – such as public safety, public health, and local transit services.

At a time when city and county governments throughout our state are struggling to meet the demand for these services, the three initiatives would eliminate important sources of revenue needed to maintain them. Collectively, the Office of Financial Management (OFM) estimates that these measures would cost local governments $263 million to $293 million over the next five years.

Below are details on how each of these initiatives would impact all local governments in Washington, along with specific information for King County and Clark County (the only two counties for which data was available).

I-1107

This measure would repeal common and reasonable sales taxes on soda, candy, and bottled water.  Because local sales tax bases (the scope of products included in the tax) are identical to the state tax base, repealing these taxes would harm both the state and local governments.  At the local-level, I-1107 would cost:

• All local governments:  $24 million per year;
• King County:  $4.5 million per year. Most of these revenues are dedicated to transit services;
• Clark County:  $200,000 to $300,000 in the coming 2011-13 biennium.  The lion’s share of these revenues are dedicated to the county general fund -- two-thirds of which goes to public safety and justice services. A smaller amount is dedicated to mental health and drug and alcohol abuse services.

I-1100

Initiative 1100 would privatize the retail and wholesale sales of hard liquor in Washington state.  As a result the state would lose all markup revenues from liquor store profits – a portion of which are shared with local governments.  As a result, I-1100 would cost:

• All local governments: $40 million to $50 million per year;
• King County: About $1 million per year.  This revenue is dedicated to the county general fund, 77 percent of which is devoted to public safety and justice services;
• Clark County: $800,000 in the coming 2011-13 biennium.  All of these revenues are dedicated to the county general fund, two-thirds of which is dedicated to public safety and justice services.

I-1105

Like I-1100, this measure would privatize the sale of hard liquor in Washington, meaning the state would lose all liquor markup revenues, which currently amount to about $70 million per year.  I-1105 would also repeal all existing taxes on hard liquor, however.  As with markup revenues, a portion of liquor tax revenues are shared with local governments.  The combination of lost markup and liquor tax revenues would have the following negative impacts on local governments in Washington:

• All local governments: $54 million to $64 million per year;
• King County: About $1 million per year in general fund revenues. Fully 77 percent of the general fund is devoted to public safety and justice services;
• Clark County:  $1 million in the coming 2011-13 biennium. All of these revenues are dedicated to the county general fund, two-thirds of which is dedicated to public safety and justice services.

For more information on these and other ballot measures, visit our Initiatives Summary page.

Sources: The Office of Financial Management (OFM); The King County Office of Management and Budget; Clark County Budget Office.