Liquor move sullies Costco reputation

June 6, 2013 

While state lawmakers sit idle, waiting for their respective party’s budget writers to find an acceptable compromise before the special session ends Tuesday, lobbyists for the giant discount retailer Costco are hard at work. They are once again trying to rewrite the state liquor laws in their favor.

Costco spent more than $20 million pushing I-1183 that privatized liquor sales and distribution in Washington. The campaign funded by the Issaquah-based retailer promised lower prices and greater access. We got the latter, for better or worse, but not the former.

We have all benefited, however, from the promised increase in state revenue. Fearing that voters would reject I-1183 because the state might lose hundreds of millions in tax revenue, Costco added language that requires retailers to pay a 17 percent fee on all sales, including those made directly to restaurants for resale.

Just 18 months after getting voter approval on the initiative, Costco is now brazenly pressing state legislators to remove the 17 percent fee.

If passed, second substitute House Bill 1161 would deprive the state of tens of millions in revenue, and give Costco, and other big retailers, an inequitable and unwarranted advantage over other private liquor distributors. Those other distributors paid more than $150 million in licensing fees. But as a retailer, Costco would be exempt.

These distributors have invested millions since the 2011 general election to re-create and improve on the state’s distribution for spirits and wine, which the initiative also closed. The Costco bill puts this system and the more than 1,000 family-wage jobs it created at risk.

It makes no sense to allow Costco to sell directly to restaurants without shouldering any of that burden and then reward them with a tax break. That would be a slap in the face to Washington taxpayers. And given the court-ordered mandate to fully fund K-12 education and the dire need to preserve and maintain our roads and bridges, it would be ridiculous to give back a voter-approved revenue source.

Let’s not forget that Costco itself included the 17 percent fee in its initiative in order to persuade voters to pass the measure.

There may be good reasons to alter the rules under which liquor sales and distribution was privatized. The Liquor Control Board is conducting a review of its implementation of I-1183 and the effects of those rules on small business.

Legislators should wait for the results of that study before making any hasty changes.

We’re disappointed because we like to think that Costco shares our Northwest values for how to treat people. A Washington state company with an outstanding reputation – it ranked in the top 10 of the 2013 Harris Poll Reputation Quotient — Costco stood as the hero in the retail world.

But I-1183 and 2SHB 1161 are starting to water down Costco’s reputation, especially in the increasingly important area of social responsibility. We’re starting to wonder what the hometown hero really values.

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