The City of Shorewood is out of the municipal liquor business. In 2007 three of the five members of the Shorewood City Council examined the future of the City’s municipal liquor operations and decided it was not a lucrative enough venture for the City to continue to be involved in. Laurie Blake has a story in today’s Star Tribune. You can see the story by clicking on this link: “Municipal liquor sales: No business for a city?”
The decision about staying in (or getting out of) a municipal liquor operation can be a difficult one. Or, for some, it can be an easy one. Some people believe a City should control the distribution of liquor in a community because they believe it will be more controlled under the non-profit management of a city government than under the for-profit management of a private business owner. Others believe a city should not be engaged in any sort of retails sales operation, liquor included. The middle ground is typically occupied by people who feel it is a bit off target for a city to be in the liquor business, but they like the idea that liquor profits are used, primarily, to fund improvements to public streets, trails, parks, police cars, fire trucks, etc. that would ordinarily be funded by property taxes.
The numbers included in Blake’s story are interesting. The first number is total sales from 2005 and the second is the 2005 net profit from liquor sales in 2005. The source of the data is the State Auditor’s Office:
Metro Area City Sales Net profits
Anoka $3,189,297 $182,058
Apple Valley $6,405,618 $555,748
Brooklyn Center $4,610,091 $182,910
Columbia Heights $6,713,932 $228,532
Eden Prairie $10,023,770 $1,096,673
Edina $10,752,724 $1,003,411
Farmington $3,441,312 $267,924
Fridley $5,283,229 $375,866
Lakeville $11,481,091 $1,149,155
Lexington $2,598,458 $171,981
Mound $2,134,980 $-118,780
Richfield $10,016,562 $619,639
Robbinsdale $2,011,139 $13,652
Rogers $2,851,190 $137,880
Savage $5,749,755 $438,991
Shorewood $2,035,480 $46,792
Spring Lake Park $2,527,828 $25,129
St. Anthony $5,298,404 $269,061
St. Francis $1,717,092 $156,434
Watertown $22,195 -$69,215
Wayzata $3,101,217 $218,624
In 2005, Shorewood sold $2,035,480 in beer, wine and liquor in order to generate $46,792 for the City’s General Fund. That’s a 2.3% profit margin. Eden Prairie, by contrast, had 2005 sales of $10,023,770 and generated $1,096,673 - a profit margin of 11%, one of the highest municipal liquor profit margins in the metro area. Eden Prairie plugs its annual liquor profits right into our Capital Improvement Fund. From there it is distributed by the City Council to pay for many different kinds of public projects, such as road improvements, park improvements, new trail construction and improvements to public buildings and facilities. If the City did not have the annual municipal liquor profits, we would need to tax our property taxpayers for a like amount of revenue; or, reduce the number of road improvements, park improvements, etc. that we try to accomplish on an annual basis. It’s a tough choice.
The tough choice for municipal liquor belongs to the City Council. It takes a simple majority vote of a City Council to give up a City’s municipal liquor operations. And once you’re out, you’re out. Can’t go back again. Because it is a public-driven choice by a community’s elected officials, the City asked Eden Prairie residents in the City’s 2006 Quality of Life Survey what they thought about the City’s municipal liquor operations. Here’s what we asked them:
Do you favor of oppose the City continuing to operate its municipal liquor stores?
84% said they “favor”
9% said they “oppose”
7% said they were “Don’t know/Refused to answer”
The 9% who said they opposed the City’s continued operation of its municipal liquor stores were asked an additional follow-up question that went like this:
Do you still oppose the continued operation of the municipal liquor stores if closing the liquor stores would result in a $1,000,000 loss of revenue for the city?
50% responded they would still oppose the City’s operation of municipal liquor stores, even if it meant a financial loss for the City.
47% changed their minds after hearing the additional information about the loss of revenue if the City got out of its municipal liquor operations.
3% did not answer or did not have an opinion.
Staying in the municipal liquor business is a tough choice, even if the profits are good, and even if those profits go to a benevolent end. It’s one of the areas of city government where elected officials face the dilemma that something that is beneficial for the community may be in conflict with their personal philosophy of life, business or politics. Think being a member of a City Council is easy? Think about the arguments for and against the municipal liquor issue. It can be a tough choice.