Liquor revenue loss impacts Moses Lake

MOSES LAKE - Moses Lake will join other Washington cities in feeling the effects of a state decision to reduce liquor profit sharing.

"We're going to be seeing some reductions in revenue from the state because of the state's own problems," city manager Joe Gavinski recently told council members. "Some of the revenue that's been provided to the cities is going to be cut, withdrawn and retained by the state for them to close their own budget hole."

Moses Lake stands to lose nearly $150,000 in revenue this year and the beginning of 2013 through a state budget cutting solution that reduces local government liquor profits and diverts a full fiscal year of local liquor excise tax distributions to the state's general fund.

"The bottom line is, with the state solving its budget problems everything kind of gets pushed downhill," Gavinski said. "As a result, in the middle of this year we're going to lose some state revenues that we've experienced for last 70 years or so."

Gavinski shared a report released by the Association of Washington Cities (AWC) detailing how local jurisdictions will be effected by the supplemental 2011-13 operating budget, which was signed by Gov. Chris Gregoire Wednesday.

The Legislature diverted about $28.8 million in liquor excise tax distributions from local governments to the general fund. According to the AWC, cities account for 80 percent of this, or approximately $23 million.

Half the diversion will take place from July to December of this year and the other half in the first part of 2013.

The Legislature also passed a bill that, beginning in fiscal year 2014, diverts about $10 million per year from the liquor excise account into the state's general fund, effectively taking about $8 million in expected revenues from cities, according to the AWC.

"The permanent diversion of the liquor excise tax and liquor revolving fund revenues is distressing," the report reads. "Liquor revenues have been shared for over 70 years because impacts of alcohol consumption have increased public safety and health costs at the local level. Those impacts will not be going away. In fact, some argue they may increase with the passage of Initiative 1183 and the number of licensed liquor retailers growing from approximately 400 to over 1,400."

Initiative 1183, passed last November, closed state liquor stores and allowed state licensing of private retailers.

While there may be legislative changes next year to help cities out in the long run, Gavinski said, for now, local jurisdictions will have to figure the decreased revenue into their budgets.

"(State legislators) claim they'll provide revenue options for us, but those revenue options require the cities to use some additional taxation, so it's an option to tax, not an option to replace," he said.