What now? I-1183 could leave Whitman County towns dry

Washington voters’ passage of Initiative 1183 could dry up some towns in Whitman County.

The initiative privatized the liquor industry, putting state-owned stores out of business and forcing those running contract stores to ponder their future.

Voters across the state approved Initiative 1183 in the Nov. 8 general election with more than 53 percent of the vote.

Colfax, St. John, Rosalia and Tekoa all have contracted stores dispensing liquor.

“I don’t know what I’m going to do here,” said Ken Johnson, who runs the St. John store out of his auto body repair shop. “I plan on staying open, but if they’re going to charge us list price to buy the stock, I don’t know if I can afford that.”

Contracted stores stock their shelves with liquor purchased by the state. They are paid on commission with the state taking the majority to redistribute to cities and counties.

Steve Gossett’s family has run the contract store in Tekoa since prohibition was repealed.

He said there is no way he could afford to buy the $26,000 of liquor inventory he has on stock.

“I sell maybe $3,000 to $5,000 a month,” he said. “There’s no way I could come up with that right away.”

Under the new initiative, stores must have at least 10,000 square feet of retail space. Stores under that size can sell liquor if there is no store that big in their area.

The initiative was backed by large grocery stores, with Costco paying a reported $22 million on advertising in support of the measure.

“Welcome to the state of Costco,” said Gossett.

Gossett’s main customer is the C&D Tavern across the street, which is run by the Chase family. He says efforts by large retailers to support the initiative will sink those long-standing relationships.

“We’re long-time family friends. They buy from me out of that loyalty,” he said. “But if the beer distributor can buy in wholesale and bring it down with their beer, how am I supposed to compete with that?”

Shawn MacAdams, manager of the Colfax Rosauers, said he has not heard from Rosauers corporate headquarters if the chain plans to stock their stores with liquor.

Garth Hill at Rosalia Empire Foods was unsure if he would sell liquor. Hill was worried about the cost of both the liquor to stock his store and the license to sell spirits.

For Teresa Knighten inside the Colfax store, a possible closure means she could soon join the ranks of the unemployed.

“I’ve been here for more than 20 years,” she said. “I’m too old to get a new job.”

State officials have called a meeting of store owners in the eastern district for next Tuesday at Moses Lake.

Johnson, Gossett and Knighten said they will wait to hear what state officials have to say about future plans before they decide what will become of their stores.

Roberta Messinger at Rosalia, though, said she plans to give up selling liquor.

“I’d just let the state come in and get it. Because I can’t afford it,” said Messinger. “Right now, I have no money out on it.”

Messinger sells liquor in a contracted store on Whitman Street. She estimated the store contains about $15,000 of state-owned liquor and that she makes about $3,000 worth of sales each month.

Buying that stock and selling it on her own would leave a lot of capital on the shelves, she said.

“I’m 68 years old. I don’t want to start a new business,” she said. “It would take years to make that money back.”

Knighten said her main worry is that the privatization of liquor sales will cost Whitman County towns revenue.

Along with sales and sin taxes, some of the profits off state-owned liquor sales are returned to county and city government. Money from liquor sales across the state is put into a pot and distributed to those jurisdictions based on population.

Whitman County jurisdictions received about $514,000 from liquor sales in the last fiscal year.

Colfax Administrator Carl Thompson said the city expects to receive $34,400 from liquor sales and excise tax revenue this year, with another $37,500 budgeted for 2012.

He worried a bit about losses of revenue, but said sales could increase throughout the state because of the initiative, which would result in more excise tax revenues.

“If it does go down to Rosauers, it may end up helping us. Because it will be more available,” he said. “But I’m not sure how this will all work out.”

Brian Smith with the state Liquor Control Board said private retailers will have to pay 17 percent of their liquor profits to the state as a fee. The initiative also requires private liquor distributors pay 10 percent of their bulk sales to the state for the first two years, then ramps that down to five percent after the second year.