Minnesota's municipal liquor stores' profits stalled and contributions to city coffers dropped considerably last year as several outstate operations foundered, according to a Minnesota State Auditor's report released Tuesday.
The 237 stores had record sales for the 18th consecutive year in 2013, totaling more than $332.8 million, but the increase was small — $3.2 million — or 1 percent over 2012. And the stores' $26.8 million combined net profit dropped $500,522, or 1.8 percent, from 2012.
The municipal liquor stores transferred $18.6 million in profits to other city coffers, or 19 percent less than total net transfers in 2012.
Also, the number of stores reporting losses — all in outstate Minnesota — increased from 25 in 2012 to 33 stores last year.
Paul Kaspszak, executive director of the Minnesota Municipal Beverage Association, said he could only speculate about the sluggish profit outlook, attributing it to competitive pressure to hold down prices despite rising product and labor costs as the economy heats up.
A number of municipal liquor stores across Minnesota have shuttered in recent years, with the total number of stores declining by 19 since 2004.
Still, the stores, which were originally opened to regulate and control alcohol sales, have since provided extra cash for communities, as well as access in areas that may not attract privately owned businesses.
Otto's annual report showed that for some small communities, municipal liquor remained a part of their revenue outlook.
"No politician likes to raise taxes or cut services. For several years, cities have relied more and more on municipal liquor income that used to be paid for out of the general fund," Kaspszak said.
That in turn could play a role in the perennial legislative fight over whether to allow Sunday liquor sales — small cities with their own liquor stores would like to prevent Sunday sales because they fear rising expenses by opening on Sunday without much added revenue. They also worry about an overall climate of deregulation that could lead to, for instance, wine sales at grocery stores.
In 2013, 205 Minnesota cities ran 237 municipal liquor stores. Of those, 111 cities operated both a bar and a store, while 94 cities operated a store only.
Other highlights from the report:
• Sales at individual outlets ranged from $125,051 in Round Lake (pop. 375) to $15.4 million in Lakeville.
• The top nine sellers were located in the greater metro area. The 10th- and 11th-largest sellers, Fergus Falls and Detroit Lakes, are in northwestern Minnesota. Metro operations are larger and more profitable than outstate. The 19 metro stores represent 37 percent of sales and net profit. Metro sales averaged $3.2 million in 2013, compared to $1.1 million in all of outstate Minnesota. Net transfers totaled $7 million in the metro despite far fewer stores, compared to $11.6 million in greater Minnesota.