The Office of the State Auditor released its annual report of municipal liquor operations yesterday. You can find an article about the report in the Tuesday, June 2, 2003 Star Tribune, which has been pulled from their website so I can’t link you to it. . You can download a PDF copy of the report from the State Auditor’s website by clicking on the State Auditor’s picture below:
The report contains this quote from State Auditor Awada: “There is no real reason for a municipality to have aliquor store unless it is making money that can be used for local government activities that would otherwise have to be paid for with increased property taxes.”
I couldn’t agree more.
Many municipal liquor stores were originally established by city governments as a means of controlling the introduction of alcohol into the community. It was thought then that local governments would be more careful about the dispersion of alcohol into the commuity than a business motivated by a profit motive. It was a different time. People were more suspicious and concerned about the negative impacts of alcohol and were willing to compromise their freedom ( and the freedom of their neighbors) to buy it and drink it. Sixty years later, we’ve changed and people’s attitudes in general towards the government’s oversight of our ability to buy and drink alcohol has become somewhat more liberal.
Now, it is generally agreed, the only reason to have municipal liquor is because of the property tax relief it provides. The financials in the State Auditor’s report are from 2001. In that year, Eden Prairie has the 4th highest sales of all municipal liquor operations in the state. In 2001, Eden Prairie’s municipal liquor stores had gross sales of $8,157,285. Of that amount, gross profit was $2,194,556; or 26.9% of sales. After adjusting the gross profit with the other operating revenues and expenses, the three stores produced a 2001 net income of $708,532. Of the stores’ 2001 net income, 84%, or $605,728 were transferred into the City’s Capital Improvement Program fund where it was used to build trails, buy park equipment, improve public buildings, etc.
The current environment is not optimistic for the future of municipal liquor operations. I do not anticipate that the private sector interests who are intent on capturing the net income produced by these stores for themselves will give up their efforts. It’s a lot of money. Right now, the City uses this money for the benefit of everyone in Eden Prairie.
