Liquor initiatives could reduce cities’ revenue

Officials: Every dollar needed in current economy

By Marissa Harshman, Columbian Health Reporter

Published:

 

Two initiatives aiming to get the state out of the liquor business could also reduce local cities’ already dwindling revenue streams.

Cities, counties and the state receive two types of revenue from the sale of liquor: Washington State Liquor Control Board profit distributions and liquor excise taxes. Board profits are revenue from permits, licenses and liquor store sales; excise taxes come from a state tax to consumers and restaurant licensees. But the two state initiatives before voters this November could reduce or eliminate those funds.

While the amount of money most of the cities stand to lose is not large percentage of their general fund budgets — less than 1 percent to about 2 percent — city officials say every dollar counts.

“With the current economic times, it is significant,” said Camas Finance Director Joan Durgin.

Initiative 1100 would privatize liquor sales, allowing any business to distribute liquor for a fee. If the initiative passes, retailers could buy liquor directly from the manufacturers. Initiative 1105 would also privatize liquor sales, but would keep a three-tier system for distribution: wholesalers sell to distributors, who in turn sell to retailers.

Both initiatives would eliminate the revenue cities get from liquor board profits. In addition, if passed, I-1105 would eliminate the liquor excise tax as of April 1, 2012.

In Ridgefield, the city garners about $20,000 in liquor excise taxes and $26,700 in board profits annually. The potential revenue losses are relatively small compared with the $2.8 million general fund budget — about 1.7 percent. But when combined with declining revenue from sales tax, development-related revenues and other sources, the impact is more significant, City Manager Justin Clary said.

“The ability for the city to continue to provide core services becomes further constrained,” he said. “A reduction in level of service for general fund programs is an obvious result.”

The city does not dedicate the liquor sales proceeds to specific programs. Instead, the revenue contributes to the general fund, which provides a number of services and programs including public safety, parks and roads, Clary said.

In Camas, where liquor taxes and profits account for 1.4 percent of the general fund, losing any revenue is significant, Dur-gin said.

“It’s important now with the drop in assessed values — our property taxes are dropping,” she said. “Losing $220,000 could be a couple of employees.”

In Woodland, the loss of revenue could mean cutting services or a staff position. The city’s general fund revenues are already projected to be down about $150,000. Losing an additional $60,000 from the board profits and excise tax would only deepen the gap, Clerk/Treasurer Mari Ripp said.

Most local cities haven’t determined exactly where budgets would be cut if liquor revenues are eliminated.

In Battle Ground, though, the money is used to fund specific programs. The city uses the revenue to support law and justice efforts to enforce alcohol-related laws, as well as fund substance abuse programs, Finance Director Catherine Huber Nickerson said.

“The loss of these revenues will directly reduce these efforts,” she said.

In La Center, the loss wouldn’t make as much of an impact. The $30,000 the city receives from board profits and excise taxes accounts for only .75 percent of the general fund. That pales in comparison with the $3 million the city gets from gambling taxes from the city’s cardrooms.

In the event both I-1100 and I-1105 pass, the Legislature would be tasked with amending either or both measures with a two-thirds vote. Failing that, the courts would resolve the differences.

Marissa Harshman: 360-735-4546 or marissa.harshman@columbian.com.