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I'll drink to that

Over the last few years, the municipal liquor stores of Becker County have been profitable, for the most part.

All of the municipalities are on- and off-sale liquor establishments except Detroit Lakes and Vergas, which are both strictly off-sale.

2006 saw a revenue increase for some of the municipalities. Detroit Lakes, for instance, had $4.3 million in sales, $1 million in gross profit on those sales, and nearly $700,000 in net profit after all expenses.

City Finance Officer Lou Guzek said those numbers are preliminary but would only be slight adjustments when the year-end adjustments are made. Numbers for the municipalities are due to the state at the end of March.

With the increase in numbers, the Detroit Lakes Liquor Fund was able to make more transfers to other funds or projects, including nearly $470,000 for widening Long Lake Road and $110,000 for the Pavilion restoration and replacement of the city band shell.

Audubon also saw an increase in sales for 2006, but a loss in net profit.

A senior associate with Eide Bailly, Brian Stavenger, who takes care of the taxes for the Audubon Liquor Store, said that loss is because more than cash is looked at on income statements.

"There are expenses for actual cash expended and also a non-cash expense for depreciation," he said.

Audubon was still able to transfer money from the liquor store fund because depreciation aside, there was an $11,000 cash-generated profit.

"As you can see, even though there is a net loss shown on the income statement, there still is some cash available to be transferred," Stavenger said.

Ogema, on the other hand, saw a slight decrease in sales.

Mary Vasecka, city clerk for Ogema, said last year the $45,000 transfer was for a water project in the city, and it went to pay for engineering fees. Once the rural grants were paid back, the money basically went back to the city or liquor store fund.

This year, the $5,000 transfer to general fund was to "keep taxes down, supplement general income."

Earlier this month, Frazee was required to hold a public hearing after its liquor store reported a loss in two of the past three years.

For the first time, in 2006, City Administrator Kelcey Klemm said he separated the Frazee Event Center from the on- and off-sale liquor and the White Pine Room, a facility that can house 150 in the basement of the liquor store.

The reason was to make the city "more comparable to other liquor store operations," he said. "Even though it's not a profit, it's an asset to the city."

As is the White Pine Room. The facility is "a little unique for us" to have," he said. It is used for senior meals, something that can't be reported as valuable when it comes time for profit.

While the Frazee Liquor Store is going through a period of change, looking for a new manager, Klemm said, "all said, there's no reason not to try" to turn a profit next year.

"On-sale has been the toughest. Sales in the bar business have been declining," he said.

And the opening of a new bar in Frazee, while good for Frazee in that it is another private enterprise, took away customers from the city-owned bar, Klemm said. But, sales and attendance are evening out as well.

This year, Callaway, whose liquor store was quite profitable for the city, started a new account for back-up.

"This money ($11,000 transfer from the liquor store fund) was used to create a reserve account for emergencies, which we did not have before, and some went to our bond repayment account to help lower the water bill for our residents," said Mayor Gretchen Stalboerger.

Likewise, Lake Park's clerk-treasurer Pam McArthur said the $20,000 transfer from the liquor store fund acts as a payment on the city's water tower that was installed in 2004. She said there is a 20-year note on the tower. She wasn't sure about the big $109,000 transfer in 2005, and the city's auditor, Eide Bailly's Brian Stavenger, said it was not his place to comment on it.

Minnesota law allows cities under 10,000 in population to operate on- and off-sale liquor stores. If the population should exceed 10,000, the municipal store is grandfathered in and can continue operating.

According to the Minnesota auditor's Web site, in 2005 (the newest information available), 226 cities operated 255 municipal liquor stores in Minnesota. On- and off-sale accounted for 135, and 91 were off-sale only.

While most city-owned stores are in Greater Minnesota -- only 21 of 226 are in the metro area -- revenue from the Twin Cities establishments represent nearly 38 percent of total sales and 37 percent of net income.

Local control began as a way for cities to control the sale of alcohol. Now, the purpose is to create revenue to supplement property taxes.

Due to losses, the number of cities operating liquor stores has decreased over the last 10 years. In 2005, seven city liquor stores closed their doors. The decrease is being blamed on a slouch in profits, an increase in insurance costs, and other concerns.

In 2005, all Minnesota municipal liquor stores combined reported gross sales of $269 million, an increase of $12.5 million over 2004. Net income increased $209,000, or 1 percent, over 2004.

One hundred-fourteen cities reported declines for 2005, with 106 of those being in Greater Minnesota and eight in the metro area.

Becker County is a part of the West Central Region, which was middle of the road on contributing numbers. The region contributed $27 million in sales, $7.7 million in gross profit and $2 million in net profit.

Of that $2 million, off-sale alone brought in $1.1 million. Those figures are comparable to the mid-section and eastern portions of Minnesota. The Twin Cities area was the greatest, and southern Minnesota was the least profitable.

Statewide, on-sale net profits for 2005 totaled $2.9 million, a decrease of 19 percent from 2004. Off-sale net profits totaled $15.8 million in 2005, an increase of 6 percent from 2004.

Over the past five years, net profits for Minnesota municipal liquor stores have decreased 7 percent overall.

The good news is that with those increased sales comes an increase in transfers to other funds. All municipal liquor stores in 2005 transferred $17.8 million to other funds, an increase of 11 percent. Of that $17.8 million, $12 million was from Greater Minnesota municipalities.

A high note for Detroit Lakes is that it is actually low -- in operating expenses.

In 2005, Detroit Lakes was the lowest city in the state at 8 percent for operating expenses. The state average is 17 percent for off-sale.

Now that calls for a drink.