Out of Control Policy Blog

Getting Washington State Out of the Liquor Business

In an editorial yesterday, The Olympian weighed in on Senate Bill 6201, a bill sponsored by Washington State Senators Tim Sheldon and Curtis King that would privatize the state's liquor retail monopoly:

Those who support privatization say the state Liquor Control Board, which manages the wholesale and retail sale of liquor, is a relic of the Prohibition era. They argue that the state agency has simply outlived its usefulness and that the sale of liquor should be in the hands of private entrepreneurs.

Perhaps their best argument is a philosophical one – that the state shouldn't be in the liquor promotion and liquor enforcement business at the same time.

On one hand, the state needs to boost revenue to fill the tax coffers and to do so must sell an ever-increasing amount of alcohol. On the other hand, the state wants to curb alcohol abuse and sales of liquor to minors.

The two missions of a single agency are inherently at odds.

Opponents of privatization say hundreds of family-wage jobs will be lost and that's particularly heartless at a time when the nation is in the throes of a recession and new jobs are scarce.

On a certain level, privatizing liquor sales sounds like a logical step for the state to take. But there are many questions lawmakers must answer – especially on financial implications for the state treasury and liquor store patrons.

Sheldon's legislation is worthy of debate and serious legislative consideration.

Last week, the Washington State Auditor's Office wet the whistle even further in a new report, "Opportunities for Washington." Among its conclusions was that the state could increase revenue from liquor sales and distribution by up to $350 million over five years beginning in fiscal year 2012 if it sold the state distribution center and auctioned liquor licenses to private retailers.

It also makes a very salient semantic point by rebranding the 18 so-called "control states"—states like Washington where government has a monopoly on the liquor retail business and adds a markup to the price before liquor is taxed—as what they really are: monopoly states. In these states, what you see are government-run liquor enterprises that abuse their monopoly status through excessive taxation.

Privatization would get these enterprises out of government while preserving its regulatory and oversight functions, what many would argue are the proper role of government. Certainly there's nothing inherently governmental about selling liquor, because 32 states don't do it that way.

Leonard Gilroy is Director of Government Reform


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