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Profits drop at municipal liquor stores

Most city-owned liquor stores in Douglas County had a rough year in 2016, according to a state auditor's report released Nov. 7.

Although most of the stores made money, profits fell in four of the five cities that have municipal liquor stores.

The lone exception was Miltona, which cleared a profit of $33,997 — a 55 percent jump from 2015's profit of $21,878.

Alexandria's two municipal liquor stores, Downtown Liquor and Plaza Liquor, made a net profit of $223,405 — a 33 percent drop from 2015's big year of $333,804.

In Brandon, the store turned a profit of $19,994 but that's down 30 percent from 2015's profit of $28,442.

Millerville's liquor store had a profit of $237, down 95 percent from 2015's $5,217.

And in Osakis, the liquor store lost money. The store turned a profit of $11,408 in 2015 but suffered a loss of $46,239 last year, according to the report.

When contacted by the newspaper, Osakis City Clerk/Treasurer Angela Jacobson explained that the state report includes factors that are not in the city's books, such as building depreciation and liabilities, such as paying out vacation time for employees who leave.

Jacobson said the city's financial records show the liquor store lost about $14,000 in 2016 and still has about $200,000 in the liquor store fund.

In Otter Tail County, the Parkers Prairie store had a loss of $90,770.

In Pope County, the Glenwood Liquor Store turned a profit of $199,100.

Statewide, city-owned liquor stores produced record 2016 sales for the 21st straight year, but higher costs kept profits down.

The state auditor reported that stores listed $344 million in sales, up $7 million over 2015. However, profits fell more than 16 percent over the past five years.

Forty-five Minnesota cities reported their stores showed net losses last year, which was 11 more than in 2015. All but one of them are in greater Minnesota.

The report from Auditor Rebecca Otto's office said Twin Cities stores are much larger and more profitable than ones in greater Minnesota, but just 19 of the 195 cities that run liquor stores are in the Twin Cities.

Otto's office recommends that city officials compare their stores' statistics in the report to other comparable communities.

A key area to compare is operating expenses, the costs to keep a store running. The auditor's report shows that in 2016 those expenses increased 8 percent, to $78 million. Liquor stores operating bars, such as the one in Osakis, experienced a bigger increase in expenses, and were more likely to post operating losses.

Net profits for greater Minnesota stores averaged $89,000, compared to $155,000 for Twin Cities stores.

Even with profit problems in many stores, statewide they transferred nearly $19 million to city bank accounts. That was 1 percent less than in 2015.

Given information in the report, 32 cities should hold public hearings, Otto's office says, including Dalton and Parkers Prairie, in Otter Tail County, but none in Douglas County.

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