Liquor fee fight pushes Costco to state GOP

SEATTLE — Executives at Costco Wholesale have long been big supporters of Democratic causes and candidates, but an obscure liquor tax fight is prompting the company to support Washington state Republicans.

In the key battle for control of the state Senate this year, top Costco brass have essentially switched sides, backing the Republican Party’s efforts to maintain and expand its majority coalition, The Seattle Times reported, citing data from the state Public Disclosure Commission.

Employees and executives of the Issaquah-based retailer have donated more than $48,000 to Republicans and $17,000 to Democrats so far this year in state contests — a big turnaround from 2012, when they gave $93,000 to Democrats and $21,000 to Republicans in state races.

“We’ve had support from certain Republicans in the Legislature, and we thought it was appropriate. It’s as simple as that,” said company co-founder Jim Sinegal, who described the change as “kinda conspicuous.”

“I’ve been supportive of Democrats in the past, and on a national basis continue to be,” he said.

The switch comes after many Senate Democrats opposed legislation sought by Costco that would eliminate a 17 percent fee that retailers must charge on liquor they sell to restaurants and bars. Liquor-distribution wholesalers pay a 5 percent fee on sales to restaurants and bars, and Costco and its allies in the grocery and restaurant industries say the 17-percent fee they’re subject to makes it too expensive for restaurants to buy from Costco or other retailers if they run out of booze between deliveries.

Washington’s Senate is dominated by the Majority Caucus Coalition, which comprises 24 Republicans and two Democrats. To retake the majority, Democrats would need to pick up two seats without losing any. In the state House, Democrats hold a 55-to-43 majority.

If the liquor-fee fight helps the Majority Caucus Coalition maintain control, then that could have broader ramifications for other issues, from climate change legislation expected to be sought by Gov. Jay Inslee to a state Supreme Court mandate to find billions of dollars more for public schools.

Given those stakes, Senate Democratic Leader Sharon Nelson, D-Maury Island, said she’s disappointed the Costco executives appear to have used the liquor-fee issue as a reason to back Republicans.

“Quite honestly, I don’t understand it when I think our social values are very similar,” Nelson said.

Brent Ludeman, executive director of the Senate Republican Campaign Committee, said while he did not want to comment on the reasons behind specific donations, “The Majority Coalition Caucus has been very successful at reaching across the aisle and showing it can promote solid business policies that support local companies like Costco.”

Sinegal and Costco chairman Jeffrey Brotman have continued to donate to Democrats in federal contests. Since 1990, they and other Costco employees have donated more than $2 million to congressional and presidential campaigns, with only 4 percent of that going to Republicans, according to the Center for Responsive Politics.

Sinegal, Brotman, and Costco Senior Vice President John McKay each donated $5,000 to the Leadership Council, a political committee devoted to electing Republicans to the state Senate. McKay has previously donated to GOP causes.

They’ve also given thousands to Republicans in several key state Senate contests, including state Sen. Andy Hill, R-Redmond; Sen. Doug Ericksen, R-Ferndale; and Sen. Steve O’Ban, R-University Place. A few contributions have continued to flow to Democrats, notably some who also took Costco’s side on the liquor fee, such as state Sen. Steve Hobbs, D-Lake Stevens.

The proposal to eliminate the 17 percent fee was opposed by unions, including the Teamsters, which feared job losses for its truck drivers if distributors lost sales to Costco or other grocers. Critics also pointed to the potential loss of state revenue, which could be as high as $1.2 million a year, according to an estimate by nonpartisan legislative staff.