Editorial: State needs to restore local share of liquor tax

While some may be wondering what happened to cheaper liquor after the passage of Initiative 1183 in 2011, local governments are wondering what happened to their cut of the proceeds.

The mayors of Spokane, Spokane Valley, Cheney, Chewelah, Airway Heights and Rosalia held a news conference on Monday to explain the impact of legislative actions after I-1183 was adopted. To help balance recent budgets, the Legislature siphoned off more than $130 million of shared liquor revenue, the majority from local accounts. If nothing changes, the projected losses for Northeast Washington cities through 2017 would total $15.2 million, including $8 million for Spokane and $3.46 million for Spokane Valley.

However, it’s the smaller towns that feel it the most. They’ve struggled ever since the Legislature rolled back the motor vehicle excise tax, so the taking of expected liquor revenue exacerbates their budgeting nightmares.

Chewelah had to shut down its public swimming pool because it couldn’t afford maintenance and operation. Rosalia had to get rid of its lone law enforcement officer. Cheney has burned through its reserves and laid off five employees. Airway Heights needs three more police officers. All these communities have some obsolete fire trucks and/or police cars and other aging public safety equipment. At a cost of $400,000 (minimum), a new fire truck is unattainable.

Once voters tune into the fallout, they may come to wonder how they’ve benefited from higher taxes and private liquor sales. Idaho certainly has.

Local liquor revenue-sharing comes from two sources: Profits from license fees and permits, and excise taxes. But legislative actions in 2012 diminished local shares of both.

The local share from fees and permits was capped at 2011 amounts, meaning they will no longer grow. All future revenue additions from this source go to the state, increasing its share at the expense of local governments.

The excise tax is charged to consumers and restaurants, and was shared under a formula: 65 percent to the state, 28 percent to cities and 7 percent to counties. But the Legislature passed a bill that permanently took $10 million a year from the local share. This move, according to the Association of Washington Cities, wiped out the proceeds for public safety that I-1183 was to provide.

I-1183 succeeded, in part, because it addressed a drawback in the previous liquor privatization initiative: reduced revenue for public safety. I-1183 stated: “Maintain the current distribution of liquor revenues to local governments, and dedicate a portion of the new revenues raised from liquor license fees to increase funding for local public safety programs.” That assurance kept law enforcement groups from opposing it.

It’s a tough budget year; they all seem to be. But public safety is a high priority for citizens, and the Legislature should restore the money local governments need for their police and fire departments.