Several states may get out of the liquor business

SEATTLE — Thousands of cases of whiskey, vodka and rum zip along three miles of conveyor belts inside a massive distribution center in industrial south Seattle, the sole location for shipping booze to liquor stores across Washington state.

The 250,000-square-foot warehouse is the nexus from which all of the state's liquor is imported, processed and moved out to the 315 state and contract stores, the only place where Washingtonians can buy hard liquor for home consumption.

As states scramble to deal with gaping budget deficits, many are looking for any opportunity to increase revenue, and Washington is one of a handful of states weighing whether privatizing liquor sales is the way to get back into the black.

Some lawmakers here want to sell the distribution center — bringing the state a one-time boost of about $33 million — and let the private sector step in to sell liquor, which some say will reap long-term cost benefits.

"To me this isn't a core function of government," said Sen. Rodney Tom, a Medina Democrat who is a chief budget writer for the Senate. "It's a retail operation. Private companies can do it as good or better."

Tom has introduced a bill that would have Washington get completely out of the liquor business, allowing an unlimited number of people to buy licenses to sell liquor, as is done in California. Other lawmakers have introduced measures taking smaller steps toward privatization, including bills that would auction off franchise agreements for stores like Costco, or which would allow a limited number of smaller contract stores to sell booze.

"When states are struggling around revenue, the idea of privatization often rises," said Steven Schmidt, spokesman for the National Alcohol Beverage Control Association, the group that represents states who are directly involved in the sale of liquor. "This year, we're seeing more efforts to privatize than we have in the recent past."

In Virginia, which is facing a $2 billion shortfall this year, recently-elected Republican Gov. Bob McDonnell ran, in part, on a pledge to privatize liquor stores as a way to raise transportation money. While privatization bills have been introduced by lawmakers in the current session that runs until March, McDonnell is working on putting together a commission on government reform and restructuring that will look at liquor privatization. His staff said that while McDonnell isn't opposed to the current bills, the issue is most likely to come up later this year, possibly in a special session.