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Voter approval of a Washington state ballot initiative to privatize liquor sales could embolden proponents of getting Utah out of the liquor business.
Washington will shut state-owned stores selling vodka, whiskey and other spirits by June 1 and dismantle Prohibition-era protections that prevented retailers from buying alcohol directly from manufacturers. Grocery stores, which already sell beer and wine, will be able to sell hard liquor, as long as they exceed 10,000 square feet.
The ballot measure, passed Tuesday by voters statewide on a 60 percent margin, has been closely watched in connection with Utah and 16 other states that control liquor sales.
"What Washington did is the right thing to do — and Utah should be out of the liquor business as well," said Utah Rep. Johnny Anderson, R-Taylorsville. "Government should be building roads or providing services to people in need. It should not be in the business of making money. That's what the private sector should be doing."
Calls to privatize the liquor business in Utah have been spurred by recent scandals involving bid rigging at the Department of Alcoholic Beverage Control (DABC).
Legislative auditors say Utah's liquor monopoly has lost millions of dollars in profits to unscrupulous and incompetent management over the past 20 years. Examiners also charge that senior liquor-control staffers failed to act, despite several audits critical of their management practices.
"Anytime you have a government agency trying to run a private business, there isn't the normal market pressures to keep it honest," said Randy Simmons, a Utah State University political science professor and chair of the state privatization board. "When you have a government entity as powerful as the DABC, there are too many opportunities to take care of your friends."
Simmons is hopeful Utah will get out of the retail side of the liquor business, but he doubts it would forego control over a wholesale purchasing system that requires retailers to buy alcohol from the state instead of directly from manufacturers.
"Utah would be better off if it got out of the wholesale business,'' he said, ``but there's a perception that with state controls, people will drink less and there'll be fewer problems involving alcohol consumption, even though control states do no better than non-control states."
In Washington, a prior privatization measure failed after opponents warned it would increase underage drinking and drunken driving by making liquor available at convenience stores. The initiative passed Tuesday limits most new outlets to larger stores.
Costco contributed more than $20 million of the $22.7 million raised by the initiative's supporters, and supermarket chains Safeway Inc. and Trader Joe's Co. also backed the measure.
Utah and Washington are among seven states running liquor outlets.
Although the number of retail outlets in Utah and Washington are among the lowest in the nation, profits are substantial. Utah brings in more than $100 million each year to state and local coffers. With privatized sales, Washington budget planners estimate license fees from 1,428 projected dealers to raise as much as $480 million over six years for state and local governments,.
Bloomberg News contributed to this report.
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Utah's liquor monopoly
Utah and five other states run liquor outlets and are among 17 states that control some aspect of liquor sales.
Utah alone restricts wine, spirits, heavy beer and flavored malt beverages to state-run liquor stores.
Markup for liquor in Utah is among the nation's highest at 85 percent.