LITTLEFORK – Unexpected money received by the city of Littlefork will be used to help pay bills at the cash-strapped Littlefork Municipal Liquor Store.
The Littlefork City Council Thursday met in special session and held a public hearing Sept. 10, to discuss options for the city-owned business, which is running out of money in its checking and savings account.
Mayor Mike Fort said the liquor store’s bank account is being depleted and it’s becoming a growing concern for the council.
“The reason why that is a concern for the city council is we said we would never use taxpayer dollars to operate or fund the liquor store,” he said.
As a solution, property tax money received by the city from the Great Northern Transmission Line will help pay the bills, for now. The council, with verbal support of the about 25 community members in attendance, unanimously agreed to transfer $15,000 received from the Great Northern Transmission Line into the liquor store fund.
The money comes from action taken in August by the Koochiching County Board, which agreed to allocate 25 percent of the $931,673 in taxes generated by the Great Northern Transmission Line to the county’s cities. About 89 miles of the 225-mile, 500 kv power line runs power from Manitoba Hydro through a portion of Koochiching County, to a substation near Grand Rapids. Littlefork city officials said they expected the annual payment to be about $17,000, but ended up with just over $32,000. The money is not taxpayer dollars.
“They’ve got a formula they use to figure it out,” city Administrator Sonja Pelland said of how much money each city gets is determined. She added the $17,000 originally anticipated was put into budget to avoid raising taxes.
“But here’s $15,000 extra dollars that we hadn’t budgeted to spend anywhere that just kind of showed up this year kind of just in time and we have a use for it,” Pelland said.
Renovations and COVID
It’s been a tough few years for the Littlefork Liquor Store.
The business needed to be closed for three months in 2019 as it underwent necessary renovations and repairs, which took longer than expected. Then, COVID-19 hit, causing it to close in March, and is still operating with limited hours six months later.
“With COVID, remodeling and the unemployment, we don’t have much left,” Fort said.
Information provided Sept. 10 showed the liquor store’s current cash on hand totals $8,255, while bills on hand add up to $13,512.
“With low sales and no special events...with on-sale closed for COVID-19... it has just not been good,” Pelland said.
Fort said choices facing the liquor store are to shut down or find other sources of revenue.
“If you shutdown, you probably don’t reopen and you lose another business in town, which I don’t want to see and I’m sure most people here don’t want to see,” he said.
The audience agreed.
When the mayor asked if those in attendance supported keeping the Littlefork Liquor Store open, only support was voiced.
Mel Millerbernd asked if the council expected revenue to be made up during the upcoming hunting season.
Fort nodded, and said October and November are typically successful months.
“(They are) probably the best months that we have,” he said, adding the council wanted to hold the public hearing prior to those months to get a feel of what the public thought.
The community has a history of supporting continued operation of the Littlefork Liquor Store.
In 2016, voters agreed to keep the store operating after a petition circulated regarding its closure. The question: “Shall the city of Littlefork discontinue operating a municipal liquor store after May 31, 2017?” was placed on the ballot by a petition containing 20 signatures from the 351 eligible voters in the city. The result: 253 “no,” and 81 “yes” votes.
In November 2017, a little more than one year after the vote, a public hearing required by the state on the future operation drew no comments from residents. Minnesota law requires a city whose liquor store has experienced losses in any two years during the past three-year period to hold a public hearing on the question of whether the city should continue to operate a municipal liquor store, according to the Minnesota Auditor’s Office. A hearing was held in 2015 and in March 2016. A two-year renovation and remodel, launched in 2018, took longer than expected, leading to an operating loss in 2019.
Then, when COVID-19 knocked on Minnesota’s doors, the liquor store closed March 17 and only offered off-sale in April and May.
Pelland said a common misconception about the liquor store in relation to the pandemic is that because it is a government-owned business, it is not eligible for the payment protection program and other various emergency funding sources.
“We can’t apply,” she said.
Fort said the city received $46,000 in federal Coronavirus Aid, Relief and Economic Security (CARES) Act money to use for COVID-19 related expenses, which could include unemployment.
“There’s such a narrow window on what you can use it for,” he said, adding it needs to be allocated by Nov. 30, or it goes back to Koochiching County.
In addition to the Great Northern Transmission Line money, the council said there’s about $50,000 in economic development money, some of which is already earmarked in the 2021 budget to go toward the community building project.
An audience member asked if everything works out, what the council’s final plan for the business is.
Fort said he’s hopeful revenues are good enough at the liquor store to build up the fund balance.
“If we can break even, we’ll keep it open,” he said. “But we don’t want to continually have to take money from other areas.”