Many Utahns would like the state to get out of the alcohol business.
But a new study says Washington State residents — who voted to privatize liquor sales in 2011 — regret making such a move.
In fact, voters would likely reject liquor privatization if the vote took place today, according to the study from the California-based Alcohol Research Group.
The study, published in Preventive Medicine Reports, found that Washington residents who voted in favor of ending state controls on liquor sales were 2.59 times more likely to want to change their vote than residents who voted against it.
The change was large enough that the measure would fail if voted on today, according to the group, funded by the federal National Institute on Alcohol Abuse and Alcoholism.
The study used data from a series of surveys conducted from 2014 to 2016 and included a general population sample of more than 5,400 Washington State adults.
The 2011 Washington initiative called for closing state-run liquor stores and allowing instead state licensing of private retailers. It led to a significant jump in the number of stores, which swelled from 330 before privatization to about 1,600 afterward.
The Evergreen State also upped its per barrel excise tax on distilled spirits — which is now the highest in the country at $32.52 per gallon, according to a Tax Foundation report from 2019.
Utah’s excise tax is about half that, or $15.96, making it fifth highest in the nation. (Utah does have the highest excise tax on beer, though, at $13.10 per gallon.)
Liquor prices in Washington increased by an average of 15% after privatization, said the study’s lead author, Meenakshi Sabina Subbaraman, a biostatistician with the Alcohol Research Group.
“But more importantly,” she added, “the group who now say they wish they had voted no is large enough that the measure would have lost in 2011 had they known its real impact at the time.”
Is this study a warning for states like Utah — which already has among the highest alcohol prices in the country?
“I can only speak to what we found in Washington,” Subbaraman said, but “based on the evidence ... states considering privatization should think through the consequences of potentially increased prices and increased accessibility.”
She said each state needs to consider “its own unique set of circumstances, look at the research that has been done in the U.S. and elsewhere, and weigh how various aspects of privatization affect public health before making decisions that are extremely difficult to undo.”
Getting government out of the booze business — even if prices go up — remains a winning move for the Libertas Institute of Utah.
“Just because a majority of the people feel a certain way,” said Connor Boyack, president of the libertarian think tank, “doesn’t mean we should restrict the rights of the minority."
Boyack said Utah taxpayers should not be required to be stakeholders in the liquor business. “It should be left to the free market,” he said, “and if that means prices go up, so be it.”
The Utah Legislature always has been skittish about making substantive changes to state liquor policy, which is supported by “influential stakeholders,” he said, namely The Church of Jesus Christ of Latter-day Saints, which encourages its members to abstain from alcohol.
To privatize liquor in Utah, “would take a strong surge of public support via a ballot initiative," Boyack said. Much like the push for medical marijuana, that would be the only way, to "create enough political pressure to make such a change.”
Adding to the state’s stranglehold on liquor, is its dependence on the revenue riches that alcohol sales bring, he said. “It’s an addiction they don’t want to get rid of.”
The Utah Department of Alcoholic Beverage Control contributed $191 million to state coffers last year. Most of it, some $112 million, went into the general fund to be used however lawmakers saw fit. The rest was divided among other programs, including school lunch, underage-drinking prevention and liquor law enforcement.
Utah is one of 16 states — and one county — that still have government-controlled liquor operations. Each entity has its own formula for earning revenues, often a confusing mix of taxes, handling fees, markups and multipliers.
While all 17 have markups on spirits, only six — including Utah — control wine.
Under state control, Utah consumers pay among the highest markups in the country. The DABC boosts the price of spirits 88% above the wholesale cost. The state gives a break to smaller producers — those that produce under 20,000 gallons per year — marking up their bottles by 47%.
It’s the same scenario for beer. Utah law requires that all brews higher than 5% alcohol by volume be sold in state liquor stores and have a markup of 64.5%.
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