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Ari Mlnarik , left, served a beer Tuesday at the Ugly Mug, a bar in downtown Minneapolis. Erik Forsberg, the bar’s owner, said the state-issued card needed to buy liquor has expired and “our inventories are diminishing rapidly over the next month.”

Leah Millis, Star Tribune

Ugly Mug owner Erik Forsberg, right, looked over receipts as he reviewed his payroll while making decisions on where he is going to cut back to save money. “We’re not just sitting on a big cushion of money where we can just ride it out and call it a day,” Forsberg said.

Leah Millis, Star Tribune

One by one, bars get tapped out

  • Article by: ERIC ROPER
  • Star Tribune
  • July 12, 2011 - 10:58 PM

Hundreds of bars, restaurants and stores across Minnesota are running out of beer and alcohol and others may soon run out of cigarettes -- a subtle and largely unforeseen consequence of a state government shutdown.

In the days leading up to the shutdown, thousands of outlets scrambled to renew their state-issued liquor purchasing cards. Many of them did not make it.

Now, with no end in sight to the shutdown, they face a summer of fast-dwindling alcohol supplies and a bottom line that looks increasingly bleak.

"It's going to cripple our industry," said Frank Ball, executive director of the Minnesota Licensed Beverage Association, which represents thousands of liquor retailers in the state.

The Ugly Mug, a popular bar near Target Field, doesn't have enough beer to get through the baseball season.

"Our inventories are diminishing rapidly over the next month," owner Erik Forsberg said. He was among a cluster of bar and restaurant owners who appealed Tuesday to a court-appointed special master to be allowed to continue buying alcohol during the shutdown. "When [the Twins are] back on Thursday and people can't get Budweiser and they can't get whatever, they're just going to go somewhere else."

Come Labor Day, cigarette smokers will be in the same bind.

The state has stopped issuing the tax stamps that distributors must glue to the bottom of every pack before it's sold for retail.

When Ross Amundson, owner of M. Amundson Cigar & Candy Company in Bloomington, saw the shutdown coming, he shelled out more than $2 million to buy tax stamps that he hopes will last until mid-August. But with no legislative agreement in sight, he's worried about what comes next.

"We've been in business for 70 years," Amundson said. "My family started it. And all of a sudden this whole thing is going to screw us over? What happens to these retailers that we cover?"

Tom Briant, executive director of the Minnesota Wholesale Marketers Association, said that "in September is when we would expect to see a shortage of cigarettes begin."

Problem will spread

Of the roughly 10,000 establishments that sell liquor in Minnesota, most of those who needed to renew their buyer purchasing cards managed to do so before the July 1 shutdown started. About 300 were caught with cards that expired on June 30 and no way to renew the permits.

That number will grow to 425 by the end of the month, according to state officials, and grow as more cards expire at random intervals.

"It's definitely going to get worse," said Jim Arlt, director of alcohol and gambling enforcement for the Department of Public Safety. "There will be more and more businesses affected." The alcohol regulation side of Arlt's office was laid off during the shutdown.

Trevor Berg, owner of Hoss' All American Liquors in Walker, Minn., says his card expires this weekend. He plans to stockpile as much as he can before then, hoping it will last until mid-August -- or until the budget stalemate ends.

"This is going to treadmill across the whole state the longer they hold out," Berg said, referring to the Republican legislative leaders and DFL Gov. Mark Dayton. "It's going to hit every bar and restaurant that needs a liquor license."

Surdyk's and Haskell's, two of the largest liquor store operations in the Twin Cities, said they will not be affected until their cards expire later this year.

On top of those businesses with expired Buyer's Cards, another 116 cannot buy new liquor because they owe delinquent taxes. They cannot be removed from the tax delinquency list until after the shutdown.

Briant said that commerce in cigarettes "would end, essentially" if the impasse continues. The impact on retailers, he said, could be devastating.

Turning up the heat

The state also would stand to lose millions of dollars in taxes that come through alcohol and cigarette sales, further diminishing already anemic revenues.

Sen. John Howe, R-Red Wing, is concerned enough that on Tuesday he even advocated for Dayton using his executive powers to allow alcohol sales to continue.

"The governor keeps insisting he wants more revenue, but if he doesn't instruct his administration to address this issue, he'll be chasing revenue out of the state," Howe said in a statement. Howe said Dayton could use his executive authority to order that the cards remain valid until the shutdown is resolved.

Meanwhile, budget negotiations on Tuesday remained at a standstill. No meetings transpired, and no offers were traded. Dayton left St. Paul to press his case for more revenue in St. Cloud, while Republican lawmakers dodged questions about whether they were going to present their first budget offer since the shutdown began.

"The biggest frustration I'm having is that it doesn't seem like there's any progress," said Forsberg, owner of Ugly Mug. "Nobody seems to be talking to each other."

Eric Roper • 651-222-1210 Twitter: @StribRoper

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