The powers that be in Edina, Minnesota have a problem with alcohol.
Officials there are attributing a 7 percent hike in property taxes to rapidly declining sales at city-owned liquor stores.
After years of operating some of the state’s most profitable municipal liquor stores, Edina faces a sobering reality. Profits and payments to the city’s general fund continue to plummet in the face of competition from a nearby Total Wine and More superstore, which entered the marketplace in 2014.
“We’ve lessened our profit margin to be more competitive and our locations are more convenient for residents,” Edina Mayor Jim Hovland wrote in the fall quarterly sent to residents. ”But it’s clear we’ve lost some of our customers to the draw of Total Wine’s very low prices — prices we simply can’t match given our small size.”
Edina budgeted $1.8 million in liquor store profits in 2015 to go “back into the community, keeping parks clean, roads smooth and taxes low,” as the slogan goes. But though still profitable, the three municipal liquor stores probably will contribute half that amount to the bottom line this year and in 2016.
“The greater the profit, the greater the benefit that can provided to residents in the form of enhanced public infrastructure and amenities, etcetera,” said Scott Neal, Edina city manager. “The value proposition of our stores is based more on convenience, selection and exceptional customer service, than it is on low prices.”