OLYMPIA – This year’s ballot measure to get state government out of the liquor business is shaping up as another multi-million dollar fight that will pit one of Washington’s largest discount retailers against alcohol wholesalers.

Also taking sides are the state’s grocery stores, with some big national chains like Safeway backing the proposal and some regional chains like Rosauer’s working against it.

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Costco is the largest single donor to the yes on Initiative 1183 campaign, with more than $1 million in cash and more than $1.2 million of in-kind contributions that helped the proposal get the required signatures in record time. Last year, the Issaquah-based chain, spent more than $3.5 million in cash and more than $1.25 million of in-kind contributions for Initiative 1100 proposal. Costco helped draft both ballot measures.

I-1183, like its predecessor, would get the state out of the wholesale and retail liquor sales and open up both to private businesses. The new ballot measure has some significant differences on who would be able to sell distilled liquor and the taxes that would be charged.

Weighing in against I-1183 this month are the Wine and Spirits Wholesalers of America, a Washington, D.C., based trade association for some distributors of alcoholic beverages. Over four days in mid-August, they gave nearly $3.7 million to the opposition campaign, Protect Our Communities. That’s nearly 94 percent of all the money the no campaign has raised so far.

Last year, beer and wine wholesalers and the Beer Institute contributed nearly $7 million to that campaign committee, which ran the campaign against I-1100.

Joining Costco is the Northwest Grocery Association, which represents some of the region’s largest supermarkets, such as Safeway and Kroger. The association hasn’t kicked in any cash, but has contributed staff time; last year it gave $190,000 in cash to the Modernize Washington campaign trying to pass I-1100.

Lining up against I-1183 is the Washington Food Industry Association, a separate trade group that includes smaller supermarkets like Rosauer’s, Yoke’s and Haagen’s, plus some independent stores in rural areas, spokeswoman Jan Gee said.

That group sat out the I-1100 campaign, Gee said. Some members would have gone into the retail liquor business if it passed but others didn’t support the way the 2010 proposal would have deregulated liquor sales and cut enforcement, she said.

This time around, the members believe they’d be at a competitive disadvantage under I-1183 because of changes it would allow in wholesale distribution of liquor, Gee said.

Under current law, the state operates the liquor wholesale and distribution system, which supplies state stores, restaurants and bars. Under I-1183, the state would sell its wholesale system and some large retailers like Costco or Safeway could set up warehouses to supply their stores. Smaller retailers would have to rely on other distributors.

I-1183 sets a minimum store size of 10,000 square feet in most communities. While most supermarkets in the WFIA would meet that, they probably wouldn’t be able to afford their own warehouses and would be at a competitive disadvantage on liquor pricing, Gee contends. Their current wholesalers like URM wouldn’t be allowed to handle liquor in their warehouses under the ballot proposal.

They’d also face expensive software upgrades to their cash registers to calculate the different taxes owed on retail sales, she said.

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