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Grand Marais Municipal Liquor Store Bucks State-wide Losing Trend - Profitable in 2016

Nov 08, 2017 08:44PM ● Published by Editor

More of Minnesota's municipally owned liquor stores are losing money, according to a report released Tuesday by State Auditor Rebecca Otto.

Some 45 cities reported their liquor stores lost money in 2016, up from 34 in the red in 2015.

Those money-losing, city-owned stores include Littlefork, which lost $72,024; Proctor lost $30,713; Cromwell lost $22,466; and Big Falls lost $323.

Grand Marais topped regional city-owned liquor stores with a whopping $391,569 profit in 2016 with Two Harbors at $245,544 and Hinckley showing a $219,593 profit.

While the 195 cities with 221 government-owned liquor stores saw $344 million in sales in 2016, up $7 million over 2015, overall profits have been falling — down more than 8 percent from the previous year and more than 16 percent over the past five years.

The auditor's office makes recommendations but does not impose any sanctions on money-losing operations.

"City officials who are responsible for the operation of municipal liquor establishments should make certain that the operations are managed appropriately and do not have a negative financial impact on the city," the report said, noting that state law requires cities to hold public hearings if their stores report a net loss in two of the past three years.

Littlefork, Proctor and Cromwell are required to hold special public hearings, by Nov. 17, to allow city residents to weigh in on the future of those city-owned operations.

Mark Casey, Proctor city administrator, said the city held its liquor store public meeting Monday night. No one showed up. Casey said part of Proctor's loss was due to loan repayments for remodeling project in 2015. He said it's not clear yet if 2017 will show a loss or profit.

"November and December are usually good months so we're still hoping," Casey said.

Liquor stores are run as a special municipal account, with profits stocking it in good years and the city dipping into it in loss years. So far Proctor's account is healthy so there's no extra cost for taxpayers.

A key area to compare is operating expenses, the costs to keep a store running, the auditor's report notes. Those expenses increased 8 percent in 2016 to $78 million. Liquor stores also operating on-sale bars experienced a bigger increase in expenses, and were more likely to post operating losses.

Net profits for greater Minnesota stores averaged $89,000, compared to $155,000 for Twin Cities stores.

Other Northland municipal liquor stores that turned a profit in 2016 include Aitkin at $63,000; Barnum at $5,699; Beaver Bay at $2,044; Orr at $56,748; Silver Bay at $7,008; Moose Lake at $68,845; Northome at $6,629; and Palisade at $7,067.

Forum News Service reporter Don Davis contributed to this report.

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