Three of four municipal liquor stores operating in Koochiching County contributed in 2019 to the operations of their cities.
In addition, none of the four cities - Big Falls, Littlefork, Northome, Ranier - are required by the state to hold public hearing on the future of the municipal liquor stores they manage.
That information and more is included in a report released recently by state Auditor Julie Blaha
The 2019 Analysis of Municipal Liquor Store Operations report is for the year ended Dec. 31, 2019.
"This is a challenging time to understand data,” said Blaha. “... I spoke of the pre-COVID numbers in our report, as well as the impact that COVID-19 might have on 2020 numbers.”
In addition, she said understanding the different purposes of municipal liquor stores across Minnesota is important when reading the reports. “Given COVID-19, differentiating on-sale stores from off-sale stores will matter more than ever when looking at next year’s numbers," she added.
Transfers
Profits generated by municipal liquor operations generally serve two purposes, notes the report. First, municipal liquor operations use profits to ensure that they have an adequate level of reserves to purchase inventory and maintain their facilities. Second, profits in excess of what is needed to fulfill the first purpose may be transferred to other city funds to supplement existing revenue sources.
During 2019, Minnesota’s municipal liquor stores had net transfers - transfers out minus transfers in - of $20.8 million, said the report. This represents a decrease of 4.3 percent from the total net transfers made in 2018. Net transfers totaled $6.5 million among metro area establishments, compared to $14.2 million for greater Minnesota establishments.
Locally, the report shows $10,000 was transferred from the Big Falls Municipal Liquor Store sales to the city's operations, and Ranier and Northome municipal liquor stores each transferred $20,000 into city operations.
No munis in the county are required to hold a public hearing because of losses. Minnesota law requires city officials to hold a public hearing on the future of the liquor store if the liquor operation shows a net loss in at least two of the past three years. While this report is based on 2019 data, an examination of losses for the years 2017, 2018, and 2019 shows that the 27 cities should hold public hearings.
Of the 27 cities required to hold a hearing in 2020, 21 were also required to hold a public hearing in 2019. Cities required to hold hearings, according to the report, are Ada, Boyd, Buffalo Lake, Butterfield, Elmore, Frazee, Goodridge, Hanley Falls, Hanska, Howard Lake, Isle, Ivanhoe, Kiester, Mahnomen, Millerville, Ogilvie, Okabena, Palisade, Russell, Sacred Heart, Sebeka, Sherburn, Walnut Grove, Waverly, Wells, West Concord, Wolf Lake
Highlights of the report include:
- During 2019, Minnesota’s municipal liquor operations reported sales totaling $372.1 million. Total sales generated in 2019 increased by $11.9 million, or 3.3 percent, over 2018. Among individual liquor operations that were in business for all of 2019, total sales ranged from $122,042 in Elmore to $16.3 million in Lakeville.
- The combined net profit of all municipal liquor operations totaled $27.9 million in 2019. This represents a decrease of $1.1 million, or 3.9 percent, from the amount generated in 2018. Among on-sale operations, net profits totaled $3.5 million in 2019, which was an increase of $4,247, or 0.1 percent, over 2018. Total net profits for off-sale operations totaled $24.4 million in 2019, which represents a decrease of $1.1 million, or 4.4 percent, from 2018.
- Thirty-three Minnesota cities reported net losses for 2019 (five fewer than 2018). All 33 cities with losses were located in Greater Minnesota.
- Municipal liquor operations located within the metro area are considerably larger and more profitable than their greater Minnesota counterparts. Although only 18 of the 182 Minnesota cities, 9.9 percent, that own and operate municipal liquor stores are located in the metro area, they represent 35.0 percent of the total sales and 32.9 percent of the net profits of municipal liquor operations. Sales by all metro area municipal liquor operations averaged $3.4 million in 2019, compared to average sales of $1.4 million for all greater Minnesota operations.
- During 2019, Minnesota’s municipal liquor stores had net transfers (transfers out minus transfers in) of $20.8 million. This represents a decrease of 4.3 percent from the total net transfers made in 2018. Net transfers totaled $6.5 million among metro area establishments, compared to $14.2 million for Greater Minnesota establishments.
To view the complete report, which includes an Executive Summary, graphs and tables, go to: https://www.auditor.state.mn.us/default.aspx?page=20201217.001.
