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Twenty-six city-owned liquor stores lost money, says report

State Auditor Rebecca Otto recently released the 2011 analysis of municipal liquor store operations. The report provides comparative data on liquor operations owned and operated by Minnesota cities.

In 2011, 208 Minnesota cities operated 240 municipal liquor stores, with 114 cities operating both on-sale and off-sale liquor establishments and 94 cities restricting their municipally-owned establishments to off-sale liquor stores.

While the majority of municipally-owned liquor stores are located in Greater Minnesota, 19 cities within the seven-county Metro area own and operate liquor establishments.

Minnesota municipalities were originally authorized to own and operate liquor establishments as a means of controlling the sale of alcohol.

For many communities in Greater Minnesota, municipal liquor operations provide access and convenience in areas that might be unable to attract a privately run establishment.

In addition to these functions, profitable municipal liquor operations have provided another source of revenues to supplement traditional tax and fee revenues.

Highlights from the report include:

• The combined net profit of all municipal liquor operations totaled $23.4 million in 2011.

• During 2011, Minnesota's municipal liquor stores transferred $20.1 million of their profits to other city funds.

• During 2011, Minnesota's municipal liquor operations reported a 16th consecutive year of record sales totaling $317.2 million.

• Municipal liquor operations located within the Metro area are considerably larger and more profitable than their Greater Minnesota counterparts.

• Over the past five years, net profits have increased 4.4 percent. Among off-sale stores, there was a 6.5 percent increase in net profits, while on-sale stores showed a decrease of 9.9 percent.

• Thirty-six Minnesota cities reported net losses for 2011, compared to 40 cities in 2010. All 36 cities with losses were from Greater Minnesota.

To view the complete report, which includes an executive summary, tables, charts and graphs, visit www.auditor.