Benton and Franklin counties and their cities could be singing the booze blues next year if the Legislature takes away millions in shared revenue from state liquor sales.
Gov. Chris Gregoire wants the Legislature to consider eliminating sharing up to $53.9 million in liquor profits and up to $33.2 million in liquor excise taxes starting July 1.
The state has been sharing half of the profits from sales and 35 percent of liquor excise taxes with counties and cities, based on population, since the 1930s.
Gregoire says the state has to quit spreading the wealth from the liquor business so the cities can share in the state's deficit woes.
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Her recommendations were recently announced with an itemized list for $1.9 billion in cuts to balance the 2012 budget.
The Legislature convenes a special session Nov. 28 to tackle the issue.
Kennewick City Manager Marie Mosley said the loss of liquor profits and liquor excise taxes would mean $900,000 less every year for the city.
"This is very serious. It would be very difficult," Mosley said, noting that Kennewick's annual general fund budget is about $44.2 million.
Mosley said the hit isn't a total surprise.
"We've seen this coming. That's why we've cut 26 positions in the past couple of bienniums," she said.
The loss of almost $1 million a year could be covered by the city's reserves, but Mosley said that is not what she will recommend.
If the Legislature follows the governor's lead, Kennewick will have to find other ways to adjust to the cuts, Mosley said.
"We are working on a letter to the governor expressing our concern," she said.
Pasco City Manager Gary Crutchfield said the $30 million general fund would lose about $700,000 if the liquor money disappears.
"We didn't build the budget thinking it wouldn't happen, but our ending balance for 2012 will absorb it," Crutchfield said.
"I'm not surprised there was some reduction proposed. We can't expect to be immune from the budget deficit," Crutchfield said.
"If (the Legislature) follows through on the governor's list, it'll be a year before we have to do anything. But there will be some restructuring in 2013," he said.
Jon Amundson, Richland assistant city administrator, said the city has budgeted $550,808 in liquor shared revenue for next year. Half of it would disappear if the Legislature adopts Gregoire's proposed budget cuts.
Amundson said Richland is well-positioned to address the shortfall, and there should be no severe affect on service levels.
Franklin County's potential loss is $73,000. "It's absorbable, but there would have to be some cuts," said Tom Westerman, the county's budget chief.
Benton County's hit would be $175,000, said Commission Chairman Leo Bowman. He said the county is $2.5 million "out of round, right now," and it is only halfway through the biennium.
Prosser's loss would be about $66,500. And West Richland's hit is estimated at $137,000, which represents about 3 percent of its general fund, said Jessica Platt, the city's finance director.
Connell collects about $45,000. Benton City's amount was not available.
David Williams, state and federal legislative director for the Association of Washington Cities, said officials from many of the state's 281 cities are opposed to the proposals.
"We weren't expecting to be held harmless, but not to this magnitude," Williams said.
He said city officials also are concerned about Initiative 1183, which proposes to shift liquor sales from the state to private businesses. While the initiative assures there will be no net loss in revenues to local government, and there is a potential for an increase, the specter of a legislative taking still exists.
The association's website, www.awcnet.org, evaluates I-1183, noting that even if it passes on Tuesday, the Legislature could "sweep away" all the shared liquor sales revenue with a two-thirds majority vote.
And a simple majority of the Legislature could do the same with the shared liquor excise tax revenue.
Williams said I-1183 is no guarantee that funds, which have been flowing from liquor sales and excise taxes to cities and counties since the end of Prohibition, will continue. The Legislature and governor still have the final control, he said.
Amundson said 115 mayors across the state have expressed disappointment about the governor's proposal.
"In the event I-1183 passes, we will emphasize the importance of maintaining the intent of the initiative to ensure local government suffers no revenue loss from the change in liquor distribution," Amundson said.
Retracting the liquor sales and excise taxes represents about one-third of the governor's cut of shared revenue for counties and cities.
The governor identified a potential $263 million in cuts to local governments statewide, but she has identified just $90.8 million as ones she personally recommends.
In addition to the liquor sales and excise taxes, the long list includes, but is not limited to, eliminating state funds for:
* Criminal justice assistance, $58.8 million.
* Sales tax credits for rural county economic development, $24 million.
* Back-fill funds for public health departments because of the loss of the motor vehicle excise tax, $24 million.
* Distressed counties and cities assistance, $8.9 million.
* Portion of counties' prosecuting attorneys salaries, $2.9 million.
* Funding the Criminal Justice Training Commission, $1.5 million.
* Rural county drug task force money, $1.5 million.