There is something happening here

We are in the midst of a crisis.  Changes are taking place in our state and our nation that look to undermine the dream of prosperity that our culture is built upon.  The gap between the haves and have-nots is growing at an alarming rate.  Poverty is turning into a national epidemic.  Washington State is no exception with 13.4%, or approximately 880,000 of our friends and neighbors caught in the grips of poverty.

Measuring poverty is complicated.  A 2007 Office of Financial Management (OFM) report details the problems associated with gauging poverty.  Two common indicators of poverty are income and social service caseloads.  Measuring poverty by income is difficult because the cost of living (healthcare, transportation, food, housing, child care etc.) changes depending on location and family size.  Depending on the method of measurement, there are conflicting reports of the rates of poverty in relation to income, ranging from 13% to 22% (with some counties reaching as high as 33%).  One common thread among income measurements is that poverty in Washington is following national trends and is rising considerably as a result of the lingering recession.  

In relation to social service caseloads, the OFM Data Book, a comprehensive collection of vital statistics about Washington State, indicates that caseloads for social service programs have steadily climbed since 2004.  Over the past seven years, there has been a 122% increase in demand for public assistance programs that help those struggling with economic hardship.  This increase has outpaced population growth which has grown only 14%in the past decade. 

Perhaps most alarming is the impact that poverty is having on children—one of the most vulnerable portions of our population.  The proportion of children living in poverty is not aligned with the state wide average.  18% of Washington’s children are living in poverty, almost a full 5% above the statewide average.  This population has grown steadily since 2007 and has reached a decade-long high, with trends most likely continuing to increase.

However, policy decisions can be made to ensure that individuals are given opportunities to break free from the cycle of poverty.  Social service programs and education help families and individuals move out of poverty.  Unfortunately, these public programs have been hit hard by the Great Recession.  Budget decisions, compounded by Washington’s volatile tax system, have taken a huge bite out of the very programs and services that act as a ladder for those continuing to struggle with economic hardship.  Downward economic trends cannot be completely avoided, but by rebuilding our tax system we can ensure greater stability and consistency in funding for public programs.

Costco brand Whiskey?

You’re all probably aware that big changes with liquor have taken place in this state in the last year. Chances are you were approached to sign an initiative petition at Costco or at a chain grocery store. With the passage of Initiative 1183 (I-1183), in November of 2011, Washington State was “kicked out of the liquor business.” Not unusual for corporate-backed initiatives, I-1183 racked in millions from corporate businesses that wanted the ability to sell liquor in this state. While the state will no longer have a monopoly on the sale of liquor, they will still generate monies since the liquor tax will remain.

Here’s how the whole thing came about...

Initiative 1183 was filed in May of 2011 and easily received enough signatures to be include on the November ballot. The initiative found, “that the state government monopoly on liquor distribution and liquor stores in Washington and the state government regulations that arbitrarily restrict the wholesale distribution and pricing of wine are outdated, inefficient, and costly to local taxpayers, consumers, distributors, and retailers.” The way the initiative sought to solve this was by opening up the market to businesses. By doing this, the initiative claimed that the state would generate more money and incur less costs relating to running state-managed liquor stores.

Costco was at the forefront on Initiative 1183. Its headquarters is located in Issaquah, WA, but has warehouses around the world. Its employees helped collect signatures inside their warehouses and the company donated over $22 million in favor of its passage. Costco’s donation was record setting. Obviously, Costco would generate a substantial amount of money in sales if they were granted the ablility to sell liquor in their warehouses. The PDC reports that pro-Initiative 1183 monies totaled over $20 million, while the opposition raised over $12 million.

There has been a growing trend in Washington over the last few years regarding liquor distribution reform. Washington was 1 of 18 states that still had state controlled liquor systems. In 2010, two other liquor initiatives made it to the ballot. Initiative 1100 and Initiative 1105 both abolished the state-run liquor stores, and Initiative 1105 also attempted to change the taxing structure of liquor. Costco played a large part in raising money for I-1100 as well; however, both I-1100 and I-1105 were voted down.

The Office of Financial Management (OFM) released an initiative cost breakdown (as they always do for initiatives).  OFM claimed that it would be hard to calculate the fiscal impact of the initiative because private retailers would set their own prices and be able to charge whatever they wanted. There is expected to be a one-time jump in revenue from the auctioning off of several state-owned liquor stores and distribution centers. Both local and state revenues are expected to increase every year, projecting the trend out until 2017.

Some of this extra revenue is generated through a new fee that would be imposed on liquor distributor licenses. The fee is 10%, “of total liquor revenues from March 1, 2012, to March 1, 2014; the fee decreases to 5 percent thereafter. The initiative imposes a new liquor retailer license fee of 17 percent of total liquor revenues beginning June 1, 2012.”

On November 8, 2011, the voters in Washington State passed Initiative 1183. Beginning June 01, 2012, grocery stores can begin selling liquor. By May 31, 2012, all state liquor stores must close. The state liquor board has an Initiative-1183 transition plan in place, click here to check it out.