Here is a question that strikes directly to the heart of every man, woman and child in rural American: Are municipal liquor stores a good idea? Should the city be in the booze biz? Does it show civic pride and patriotism to get down and get drunk?
For years, probably ever since the inception of the muni idea, men of good conscience and strong moral fiber have wondered if city governments should be partially underwritten by the sins and shortcomings of the drinking class. Depending upon where you stand, sin-wise, your answer will change from “yes” to “no” and cover every rationalization in between.
Until recently, the standard defense for munis has been that they keep the taxes down. The profit margin has always been held up as the figure taxpayers would have to pay in addition to their current tax tab if the city took a prohibitionary stance, sin-wise.
Well, in many communities, that argument is getting progressively stale, like last night’s beer ... because the profit margins are shrinking.
For example in 1979, the Isle Municipal Liquor Store made $32,087 income over expenses. In 1980, it made $23,365 and in 1981, it looks to make $12,968 ... and this is after running over $400,000 through the books. In 1982, the city projects disbursements for the muni of $412,000 and income of $420,000. That leaves $8,000 to attack that old levy, tax-wise.
True, municipals employ people and generate business within the community, but so would a privately owned liquor store. If you ask a realtor about profit margins and what you can expect to clear owning an on and off sale watering hole, he’ll tell you to expect 12 percent. Powerhouse profits in Isle are three percent.
The question is not so much why is the muni not making about fifty-some thousand a year, as it is “why bother?” Running over $400,000 through the till and keeping about $13,000 is much ado about nothing, profit-wise.
Since the profits continue to go down and the expenses keep going up, at what point would it be good business to close it down and shut off the powerhouse power? This might make some holdovers from the WCTU happy as clams, but that would hardly be the point. People who don’t like drinking are going to continue not liking drinking no matter who owns the bottles.
The point is that a private enterprise operation, selling booze, and maybe food, which caters to the local and the weekend crowd and offers games and music could make a bundle on the south shore of Mille Lacs. A private operation could do a lot of things a muni by law is barred from doing, promotion-wise.
Muni prices are always higher than the same stuff sold in the private sector and maybe people are just tired of paying a buck and a half a liter more. In addition, it is a well known fact that restaurants serving liquor, entertainment and atmosphere make more than those which do not. No matter what the powerhouse profit picture is in any of the local communities having munis, the fact is no other liquor is being sold within the city limits. So where does everyone go for a good time? Outside the city limits.
Would taxes and license revenues, increased general business traffic and so on, off-set the shrinking muni profits, the money that supposedly helps keep town taxes down?
Inside as few as three years, by current projections, the muni could be a break-even proposition and break-even means broken down, money-wise.