Article by Erik Smith. Published on Wednesday, October 20, 2011 EST.

$8.9 Million in One Day Brings Costco Total to $23 Million, And There May be More – Opposition Hasn’t Reported Yet

 
By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, Oct. 19.—A jaw-dropping contribution from Costco Wholesale to this year’s liquor-privatization campaign has shattered all Washington records, and certainly promises to keep Washington television viewers entertained in the three weeks that remain before the November general election.

            Costco dumped an astounding $8.9 million into the campaign for Initiative 1183 on Monday, bringing its total contribution to a whopping $23 million.

That’s the biggest single contribution ever.

That’s the biggest total contribution ever.

That makes the pro-1183 campaign the biggest-spending initiative campaign in the history of this state.

That makes the 1183 campaign, in sum, both pro and con, the biggest-spending initiative campaign ever.

And you know what? There still may be more coming.

            A Matter of Strategy

The contribution came on Monday, the deadline for sky’s-the-limit contributions for initiative campaigns. On Tuesday, the state tripped over a deadline; the election was suddenly three weeks out. So now the state restricts contributions to $5,000.

And you might say that whopping contribution on deadline day was a matter of strategy – maybe one of the cleverest ever played in a Washington-state campaign.

Costco has always been the prime financier of I-1183, which would shut down the state liquor stores and allow supermarkets and other retailers to sell hard liquor for the first time since Prohibition. Other interests have put up only a few hundred thousand. But there are interests on the other side with pockets just as deep.
            The measure makes some big alterations in business practices of a type that escapes public attention – retailers would be able to deal directly with manufacturers rather than forcing them to go through distributors, as happens in every other state of the union. Same thing would happen with wine, though the changes there are a bit more subtle. So what it means is that a distribution industry created by laws and government regulation is under attack, and the distribution interests have been spending just as heavily as Costco to defeat the measure.

You don’t hear much about the business angle in the TV ads, one of the few solid issues in the campaign. They’re all about increases teen-age drinking, with no solid factual basis for the argument – the horrifying possibility that small grocers might start selling booze, even though small grocers are part of the opposition coalition – and so-called tax increases that actually represent a reduction when compared with the current system. There was even an ad that featured a Longview restaurant owner who claimed steep new taxes would drive her out of business, and the funny thing is that she doesn’t even have a liquor license.

The key thing is that up until that Monday deadline, Costco was pretty well keeping pace with the national liquor distributors. Every time the distributors kicked in a million or two, Costco did the same. On Monday the no campaign had raised $11.5 million, and the yes campaign had $13.5 million, thanks largely to a $2.3 million contribution from Costco that showed up over the weekend.

             If Costco hadn’t put in any money late last week, it’s safe to say the opposition would have been mighty suspicious, and might have been getting out its own checkbooks on deadline day.

And then on Monday, just as the deadline hit, Costco made the biggest contribution in state history.

Thank Goodness for Costco

“One of the members of our coalition said, ‘Thank goodness Costco can afford to write that check,'” said Kathryn Stenger, spokeswoman for the yes-on-1183 campaign. “Because the members of our coalition are saying we need to get the state out of the business of selling liquor and we need to get rid of the outrageous markups that the state puts on the sales of liquor in Washington. We didn’t think the opposition would stoop to the level they have. And it takes a lot of resources to make sure we have a process where voters can make an informed decision.”

It is interesting to note that the contribution beats a record set last year in this state by the promoters of Initiative 1107, the tax rollback measure sponsored by the soda-pop industry. Last year jaws dropped when the pop distributors spent an astonishing $16 million to promote their initiative. It did the trick. Voters said yes. This year’s liquor campaign is being masterminded in part by the same Santa Monica-based consulting firm, Winner & Mandabach, one of the biggest players in the state-initiative business.

Here’s the thing nobody knows yet. Did the distributors cut some big checks of their own on Monday? It is entirely possible that the no-on-1183 campaign got some whoppers of its own.

The way the rules work at the state Public Disclosure Commisson, before the deadline day campaigns had four business days to deposit campaign contributions. Once they deposit the checks, they must report them the following Monday. The big Costco contribution was reported immediately because the check was deposited right after it was received. If the distributors ponied up, that money won’t show up until next Monday, or maybe even the Monday after that.

It’s bit like playing Final Jeopardy, when none of the contestants know how much the others have wagered until after they get past the final question.

           Pro Forma Outrage

Meanwhile, the no campaign, officially dubbed Protect Our Communities, is expressing a pro forma sort of outrage. After the Costco contribution showed up sometime late Tuesday or early Wednesday on the Public Disclosure Commission website, the opposition issued a statement.

“Costco began I-1183 by using paid signature gatherers to get on the ballot. It continues to fund more than 99 percent of the campaign. I-1183 is not a grassroots community effort. It is a money grab by a single powerful corporation to use the citizens’ initiative process for its own gain.”

What the statement didn’t mention was that of the $11.5 million raised by the opposition campaign, a little shy of $11 million comes from commercial interests as well – from distributor associations in this state and on the national level, and from distributor groups from places like Louisiana and Georgia. Unions have kicked in just $545,000, and there are only a couple thousand dollars’ worth of checks from actual human beings.

            Big Fun Coming

What it all means is that there’s big fun coming, at every commercial break during television programming for the next three weeks. And there’s no telling what wild claims are on the way. But certainly anyone who owns a television license in this state suddenly has a license to print money. Initiative campaigns aren’t subject to rate restrictions, as are those for federal candidates, and so stations can charge whatever the market will bear for the limited amount of airtime that remains available between now and Nov. 8.

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