Morning Fizz

After Detailed Discussions

By Morning Fizz, Thursday, January 7, 2010 at 8:52 AM
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1. City attorney Pete Holmes attended last night’s meeting of the Southeast Seattle Crime Prevention Council—the first time, according to several in attendance, that a city attorney has showed up for the monthly meeting.

After listening to the usual litany of South End complaints—a new liquor license granted to a dollar store in Hillman City, too many social services being located in the area, a large restaurant in the Genessee District that’s been having raves—Holmes said the city’s budget situation probably means things will get worse before they get better. “We’ll probably lose six to ten lawyers next year if the budget holds,” on top of stagnant police staffing.

Since taking office, Holmes has fired about a dozen assistant city attorneys and other staff.

2. Station-area planning didn’t come up much at last night’s meeting, but the Southeast Seattle group seems poised to oppose any effort to revive last year’s failed transit-oriented development bill, which would have increased density around light rail stations. Some in the group believe density around rail stops will mean increased crime in Southeast Seattle. We’ll have more on that debate later today.

3. State GOP leaders—Attorney General Rob McKenna, state senate minority leader Walla Walla-area Sen. Mike Hewitt (R-16), state house minority leader Chehalis-area sate Rep. Richard DeBolt (R-20 ), and Secretary of Sate Sam Reed—wrote an editorial for the Seattle Times this week suggesting ways to deal with the state’s $2.6 billion short fall without raising taxes.

Along with scaling back health care coverage for state employees, calling off raises for state employees, and offering a private alternative to the state’s workers compensation plan, the Republicans suggest cutting off the Washington State Liquor Control Board and privatizing liquor sales.

Republican Yakima-area state Sen. Curtis King (R-14) has, in fact, teamed up with conservative Olympic peninsula Democratic state Sen. Tim Sheldon (D-35) to propose legislation that would do just that.

We don’t get how this brings in money for the state though. The WSCLB’s operating budget is $120.75 million, but statewide liquor revenues are $330 million. So, we save $120.75 million, but we lose $330 million? That means altogether, we lose $209.25 million.

4. The city has issued a cease-and-desist order against the Grocery Outlet at MLK Jr. Way S. and S. Rainier Ave. for illegally operating a park-and-ride for light rail users. According to the order, issued by the Department of Planning and Development in September, park-and-rides are illegal in areas near rail stations. The violation carries a fine of up to $500 per day.

5. The Seattle Times spoke to Don Davidson, the newly appointed mayor of Bellevue, yesterday. From the looks of his comments, the Bellevue council is poised to vote 4-3 in favor of council member Kevin Wallace’s elevated “vision line” light rail alignment, which would run east of downtown Bellevue, avoiding the area where people live and work and skipping over the South Bellevue park-and-ride. “There was a 4-3 split, and now that’s reversed itself,” Davidson told the Times. “It’s something that people should be listening to.”

6. King County Executive Dow Constantine announced yesterday that he had decided to transfer Puget Sound Park to the city of Burien, concluding a longstanding (and convoluted) battle between the city and the county that has held up annexation of part of rural King County by the city since last year.

“After detailed discussions, I agree that transfer of the park to the city is the right thing to do and should occur as part of that larger annexation,” Constantine said in a statement.

  • Paul Symington
    Regarding DPD's cease and desist order for the private park and ride lots. Please refer to the Seattle Comprehensive Plan's Transportation Element policy T26:

    Discourage the development of major,
    stand-alone park-and-ride facilities within
    Seattle. Situations where additions to
    park-and-ride capacity could be
    considered include:...Opportunities exist for “shared parking”
    (e.g., where transit commuter parking
    can be leased from another development,
    such as a shopping center, movie
    theater, or church    );..."

    I'm not exactly sure if this would apply to the disputed properties in the Rainier Valley, but it sure sounds like it might.

    Peace.
  • Paul Symington
    1. Continue state-control over distribution of liquor: A) Alcohol is at least a factor (if not direct cause) of tens of thousands of deaths annually in the USA, and it makes some people act crazy (there are enough nut cases walking around as is, they shouldn't have easy access to cheep privately-distributed liquor); B) Responsible consumers can easily access state-liquor today - get off your ass and make an extra trip; C) State liquor employees earn better pay/benefits than most private clerks would make; D) Sales profit is good for State coffers.

    2. REGULATE TOBACCO DISTRIBUTION (or at lease cigarettes) the same way as liquor. Ciggarettes are more DEADLY than all other drugs, legal and illegal, combined. Regulate its distribution and make more profit for Olympia while we are at it.

    3. Legalize pot distribution though state liquor stores. Pot is way less harmful than alcohol and cigarettes, so obviously it should be legal, but making it available though liquor stores could rise some revenue. However, Olympia would still have to compete with the private black market in pot distribution - it wont go away for cannabis like it does with liquor unless Olympia can totally undercut private black market price points.
  • On the subject of alcohol - it should be regulated and taxed to the same degree medical marijuana is - doing the same with Porn, prostitution and cigarettes would be a good idea.

    That said, some sort of level playing field public/private competition would be a good thing.

    The price of alcohol should definitely not be lowered and six taxes should definitely be raised this session - perhaps most dramatically with 7-11 junk food.
  • Somebody just released the index to Mark Sidran's archive. I made the list, one of only 8 individuals listed including Michele Malkin and John Hoff.

    http://nwda-db.wsulibs.wsu.edu/nwda-search/fsty...
  • Hope Brady
    Did Carr fire any of Mark Sidran's assistants after he was elected? Couldn't Holmes have at least given these attorneys a couple of months to look for new jobs? Why was it necessary to show them the door in such a heartless manner? He seems like a very cold man.
  • Hope Brady
    Did Carr fire any of Mark Sidran's assistants after he was elected? Couldn't Holmes at least given these attorneys notice that they might want to look for a new job? Isn't that normally how it's done? He seems like a very cold man.
  • Hope Brady
    I have been reading the frequent commenting on Peter Holmes and as a citizen I am concerned. His comment at the community meeting that things will get worse before they get better and his admission that he will fire more assistant city attorneys soon doesn't give me a lot of confidence that he takes public safety seriously. Public safety is always a number one priority in a municipality and he seems ready to throw in the towel before he has been on the job for a week. Not a strong leader, unfortunately for us.
  • getagripseattle
    Sarah68: Please name one assistant city attorney who publicly supported Tom Carr that was fired by Pete Holmes. No assistant publicly supported any candidate. Look at Holmes' contributor list and you will find that he was heavily supported by the criminal defense bar, which says everything.
  • sarah68
    Whatever you think of Holmes' particular choices of attorneys to keep or not keep and who he's going to hire, every incoming administration picks it's own people. In this case, Carr and Holmes battled pretty viciously during their campaigns and some of Carr's people publicly supported him. I wouldn't expect Holmes, or anyone, to keep all of those people, or any of them. If Holmes had been the incumbent and Carr the winning challenger, I wouldn't expect Carr to keep Holmes' supporters either. The winner gets to chose his subordinates.
  • Tyler
    Privatizing the liquor industry will also mean that hundreds of jobs will be lost because the private industry wont be willing (ie pay the cost) to hire the employees who were originally working in the state run stores.
  • getagripseattle
    Sophie is correct. City Attorney's budget for 2010 was approved prior to Holmes taking office. Cutting attorneys based on "budget cuts" is a lie. And he did hire replacements for the ones he fired. He cut attorneys to pay for his advisory staff. Brilliant!
  • I want cheap booze, and, contrary to the what Marty Brown said on Inside Olympia, I really want booze sold in more places.


    Btw, privatizing is sometimes a blackwater, uh, bad move. In this case we are talking about retail sales that is already performed in the private sector at 7-11.
  • morning fizzy
    The assumption that the state will be able to raise taxes to capture the current true profit margin and even more to capture the efficiencies of the private sector is far fetched.

    A more likely outcome is that booze gets cheaper and sales increase fairly dramatically. A small increase in liquor taxes combined with the increased consumption will result in lowering the loss of income or perhaps even an increase depending on the unknown variables of the new tax rates and the increased sales.
  • Pablo
    @23 Under your argument the state should then also take control of selling cigarettes, condoms and porn to save us from ourselves.
  • Mr. X
    @23,

    I know - let's ban alcohol altogether. After all,
    those were pretty much the same reasons the temperance movement gave in support of prohibition.

    Oh wait, that didn't work out so well...
  • PCO37
    Where states have privatized alcohol sales there has been an increase in consumption, underage drinking and DUI related accidents. These are social costs that may exceed the one-time gains (usually very small) from asset sales. Additional DUI convictions will increase corrections expenses and DUI accidents will increase hospital and medical bills paid by taxpayers and babies/children with alcohol related problems will increase medical and educational expenses.

    Perhaps the legislators who vote for the privatization should be held criminally responsible for the additional deaths and babies with problems due to their votes.
  • Pablo
    @19 - A good idea is a good idea regardless if it's by the r's or the d's. The current system sucks and everyone knows it.
  • Sophie
    Didn't Pete Holmes hire attorneys to replace the ones he fired and isn't he adding positions to his staff like Chief of Staff and Staff Council and Policy Director that didn't exist before? Could this be the reason there is no budget in 2010 and weren't the City department budgets already finalized in 2009 -- Pre-Pete?
  • Mr. X
    @18,

    I'm a hard core Democrat who would like to be able to buy a bottle of hard liquor in any convenience or grocery store that can get a license to sell it.

    You know, like in most of the rest of the US of A?
  • pete
    @13, you're probably right, I don't know for a fact, but suspect that wslcb's retail employees earn more (and have better benefits) than their private sector counterparts. But by itself, I don't consider that fact (if it is a fact) a compelling reason to close the wslcb's stores.
  • Slippery Pete
    @5: If elementary arithmetic is not your forte (see yesterday's confusion with integers and percentages), I don't know why I should expect you to understand simple economics.

    Here's how privatization works: (note, I'm taking your numbers as gospel . . . $120MM as total expenses, and $330MM as total revenue)

    Washington consumers are willing to spend $330MM on booze. Under state control, this breaks down to $X in taxes and $330MM-X in booze itsef. Because expenses are $120MM, then it follows that the profit margin on booze sales is $330MM-X-120MM=$210MM-X.

    Once privatized, the competition will depress liquor retail prices (i.e.: the first actor will price liquor as the state priced it, the second (or third, fourth, etc.) actor will price liquor slightly lower so as to undercut the first actor, the first actor will respond by further undercutting the second, and this process will continue until lowering prices any further would cease profitability, and the prices are so low that it would not be profitable for a subsequent actor to enter at all). Total liquor sales would then be $330MM-Y, where Y is the amount retail prices have been lowered. (n.b.: the liquor taxes would still exist, so that the state earns $X in taxes (as before), and the private sellers see revenue of $330MM-Y-X.) However, as established earlier, consumers are willing to spend $330MM on booze, so taxes could be increased by $Y without affecting demand. This tax increase $Y would be passed on to the consumer, so that liquor sales would amount to $330MM-Y+Y=$330MM, which is what was being spent anyway. The private sellers themselves see the same revenue as if there was no new tax ($330MM-Y-X), but the government now earns $X+Y in taxes.

    As in most high volume, low price retail businesses, the profit margin on each sale is exceedingly small. Assuming the private sellers also have costs of $120MM, then $X+Y could be almost as much as $210MM (profit equals $330MM in sales, less X+Y paid in taxes, less $120MM in expenses; if $X+Y=$210MM, then profit equals zero, if $X+Y is slightly less than $210MM, then the enterprise is still profitable for the private sellers). However, it's also reasonable to expect that the private sellers can operate their business more efficiently, so that they have less expenses than the $120MM currently being paid by the state. Considering this, then $X+Y will be $210MM+Z, where Z is some amount slightly lower than the savings in expenses that would be realized by private control.

    This analysis completely ignores the fact that the liquor market is highly segmented (e.g., there are some people, like college students, who will buy whatever the cheapest booze is; there are others who will buy that 20 year old bottle of scotch no matter the price, and others who are buying Absolut but might start buying Grey Goose if it were a little cheaper). Aggregate demand would likely rise by lowering the prices for certain segments. It would also likely rise if the availability of booze increased. So there's a chance that the $330MM being used would actually rise, which means that $X+Y would rise as well.

    But at the very least, the state now is making $210MM from booze. Under privatization, the state will make at least $210MM+Z, which is higher. (And there's a good chance the state will actually make $210MM+Z+A+B+..., where A is the increase in aggregate demand resulting from the new sales model, and B is cost of a license the state requires the private sellers to buy.)
  • Redak
    I wouldn't have guessed that so many publicola commenters would agree with McKenna, Hewitt & DeBolt. Could there be more to the story of why these hardcore Republicans want the state to privatize?
  • Gidge
    @11--the point made at the meeting last night was that no City Attorney (not Assistant City Attorney) had been to a meeting in a long time--in other words, Tom Carr didn't show.

    And Holmes was clear that he was happy w/McGoodwin. I don't think he has any plans on moving him in the near future.
  • Africa
    South East Seattle crime prevention Committee should not advocate gentrification of the poor in SE. It is hurting to hear some of the folks in that body calling low income folks in SE as a part of the crime problem in the SE Seattle. SE seattle needs more economic development and more resources so that our community will succeed as whole, it needs better mentor programs four our youths-- to secceed in schools and become better and productive members of the society, We need to advocate closing the gun loopholes in our city so that our children will not have an easy access to guns, we need to advocate brining jobs and more business apportunities to SE.
    Those are the issues we should be advocating Not anti-homless and anti- poor policies. SE crime prvention Committee need to rethink its strategy if they need to earn the respect of the diverse groups of SE- particularly people of color.
  • Mark Centz
    Those WSL stores should provide additional income from legalized herb sales, or perhaps that could be done at the local 7-11 with the hard alcohol and we can take the tax proceeds from both.

    On the Eastside link, we can take our cue from the HCR work in the Senate- build the crappy line now and and fix it after Freeman's heirs realize that profits await them in the fix.
  • Mikos
    Regardless of the savings, it makes no sense to hang on to a institution that is essentially a response to the end of prohibition. The state should tax the h--l out of liquor but that should be the limit of its involvement.
  • Christi S.
    Other control states have privatized and realized benefits. Alberta and Penn are good examples.

    From the consumer side, you get more stores, better operating hours, cheaper prices, better selection, etc.

    It stimulates the economy, as new private stores are opened and brings jobs. New money moves into the state from the distiller, winery and distributor tiers - as is usual in the three-tier system.

    It's usually a staged plan that removes the monopoly and conflict of interest at the state level, while retaining oversight. The liquor control board changes to a regulatory and audit model, like TABC (TX). Moving to a 3 tier system is something that we can do and the idea is that revenues to the state maintain at the same levels or increase through taxation at the retail business level. Controlling revenues at current levels or bringing them up is our choice via taxation levels at the retail level. Alberta actually had revenues skyrocket and lowered taxes multiple times to maintain revenue at a constant.

    The prep work is important to get privatization done correctly - licensing process tightening, regulation modification and simplification come before the selling of the state liquor stores. An active license should come with the sale/auction. Then, over time, as revenues are managed, new licenses are added.

    Managing revenues in the switch is tricky though and has to be done carefully because you go from adding margin to the product BEFORE taxation (monopoly/control state system) to taxation at the wholesale level (3 tier system)

    The studies I've looked at say that in addition to the initial millions in initial sales of the state stores, we could also increase revenues to the state substantially over a 5 year span. That's also the experience of other states that made the switch.

    http://www.sao.wa.gov/auditreports/auditreportf...
  • Francis
    @5 The real long-term savings are in not having to negotiate pay raises and pension benefits and health care costs for unionized state workers to run the liquor stores and the agency.
    The other, additional one-time shot of money would come from auctioning off the permits to retail liquor in the private sector.
  • Allison Roundtree
    I don't understand why in the world the city has such a vengence against private park and ride lots near the light rail line.
    1st of all, ridership on Link is far, far below projections.
    2. The neighborhood businesses are struggling, as they have been since construction began. Allowing a P&R puts people back into the neighborhoods.
    3. King County Metro cut out a critically important bus route -- the 42 -- that was substantially more localized than its replacement, the 107. Several neighborhoods are now nearly vacant from the very transit that gets them over to the light rail.
    4. Before seeing any negative impact from hide & ride street parkers, the City of Seattle slapped a residential parking zone within 1/2 a mile of all light rail stations....even in the mostly industrial area around the Henderson station.

    5. Political leaders talk about public-private partnerships and creating business opportunities. However, at the first opportunity that a business actually tries to create a partnership or entreprenurial opportunity to better serve both government (light rail, in this case) and citizens, the City quashes everything.

    It would appear by the above actions that governments are conspiring to make light rail fail and make commuters suffer. WTF? Is this what our government is for?
  • southeast citizen
    #1 -- got news for ya, John McGoodwin, the southeast precinct liaison attorney from the Seattle City Attorney's Office, has been attending these meetings for months. He may not be able to if Holmes continues to sack attorneys like he's been doing without first engaging in the budget process with City Council.
  • Pablo
    @5 - You're assuming the state would not get any cut of the liquor sales revenue if handed over to private sector and would only benefit from the $120M in savings. Also, is the $330M revenue or profit? If it's just revenue then the case for a change is even stronger.

    I am not privy to the details, but I am willing to bet the state is not going to just hand the liquor cash cow to private interests without taking a cut of the proceeds i.e. tax it. Under this scenario, they would save $120M (low end) plus make money by taxing the sales at the grocery stores. I can't imagine the state would not come out ahead of the current system under this proposal...drop the overhead of thousands of bottle clerks and stores, and take a cut of likely increased liquor sales from private sector in hundreds of more locations.

    There's also the economic costs to citizens of time and money making folks drive or bus miles out of their way to buy a bottle of booze when they could just pick it up at the neighborhood store. Even if the proposal is revenue neutral, this is enough of a win for citizens to make the case for the change.

    The current state monopoly on liquor is throw back from prohibition that has morphed into the state labor unions holding a monopoly on a product the state as no business controlling.
  • morning fizzy
    As I understand it the lawyers weren't fired, they just weren't rehired by a new "firm" - were Tim Ceis and the rest of Nickels' team fired by McGinn by your logic?
  • pete
    @5, privatizing would almost completely eliminate the control board's operating budget, which you say is $120M - that's savings. It's true that the "profit" part of the state's revenue (total revenue you cite at $330M) would be lost, but not the tax portion (I don't know the split here).

    And as @1 mentioned, their has been significant capital investment that the state could liquidate for a one-time benefit.
  • Mark Funk
    This is a small point: The article by state Republicans that appears on the Seattle Times editorial page is an opinion piece (or, in newsroom shorthand, an op-ed), not an editorial. Editorials are written by the newspaper's editorial staff and represent the official position of the newspaper. Opinion pieces reflect the views of those signing the piece.
  • Regular Voter
    Gotta laugh at the City issuing it's cease-and-desist order against Grocery Outlet, a store has been closed and gone for years. The land is owned by the University of Washington so maybe they should get the ticket?
  • Mr. X
    In RE Point #2 - talk about a straw man argument - the most vehement objections to the failed TOD bill came from low-income communities of color who were concerned with gentrification (and also with the misuse of the term "blight" to allow the expanded use of eminent domain on property owners who didn't fit the new improved yuppie vision outsiders had for their neighborhoods).
  • @4,

    Okay. But where are the savings? That's the context here.
  • Pete
    Gross revenue on liquor sales depends on how much liquor is sold, independent of whether those sales are public or private. Marketing liquor is not an essential public service and is no doubt one that could be provided more efficiently by privatizing.
  • bellevue rules
    if it's not going to downtown bellevue, let's just drop the extension to the east side, and build it instead to west seattle and ballard. Or Southcenter. Or anyplace that people actually want it, and where it will be used.
  • real cities
    allow private owners to provide parking. If you don't allow this, then, duh, those drivers can end up driving all the way into downtown. Bad for environment.

    Indeed, most train systems in big cities do have parking lots at the outlying stations. This is normal, and it is what has proven to work around the world in hundreds of systems.

    The people driving and parking also are likely to stop and buy a latte or pick up dry cleaning or maybe patronize a little grocery store or deli betwixt parking and entraining, thus supporting the local business and the walkability/amenability of the area, thus supporting TOD.

    Seriously, go look at Ballston VA. Big parking lots. Huge condo buildings. Tons of restaurants. A minidowntown where once there was a bland strip mall, before the train was built.

    And more. That parker who then rides the train to downtown becomes a downtown pedestrian who walks around, perhaps walking to a restaurant or bar or movie or store after work. Whereas if he or she drives downtown they are likely to just get in the car and drive all the way back to Kent or wherever, supporting sprawl.

    "Ohmygod we don't want you walking around downtown and taking the trian unless you are 100% purely transit, any use of car on your trip must be verboten!" is a bit prudish and p.c., very typical of Seattle, which seems more about displaying p.c. virture than actually moving people around and building a great city in a sensible way. Which if you really wanted to do, you would just copy what other cities do, and what they do is, allow private owners to provide parking, even in TOD areas, and near stations.....
  • some basic economic thoughts
    the operating budget does not include pension and retirement health care costs of the liquor store workers and does not consider the capital invested in the land, buildings, inventory and going concern values of these sites, which, if sold off, would represent a big one time windfall for the state, providing money useful for things like health and education.

    Plz. at least provide all those numbers.

    You'd also want to compare tax revenue and wh. there is an increase if liquor were more widely available at every grocery store as in some other states.

    Full legalization can enhance revenue, iow, plus we get cheapper booze....there's that little economic benefit to the state, too, since in some sense we are concerned with people....the state store thing is a monopoly that artifically raises prices thus extracting more money from our pockets than would be done in a more open market.
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