The Savage municipal liquor operation is on track to be profitable for the first time in years but hasn’t met its budget, city officials said this week.
On Aug. 5 the City Council reviewed the fund’s financial report for the year’s second quarter.
Savage owns and operates two stores, Marketplace Liquor and Savage Wine & Spirits at Hy-Vee, and the municipal operation prohibits other entities from opening liquor stores within the city.
The fund previously helped service the debt to build the Savage Library and McColl Pond Environmental Learning Center, but the liquor operation hasn’t been profitable since 2015.
City officials discussed ending the liquor operation last November and decided to wait another year before considering the possibility again. In April, officials moved to cut costs by eliminating staff positions and reducing staff time.
City Administrator Brad Larson said the full savings won’t be realized on the books until the next quarter, and he’s optimistic the year will end well.
“Sales are going in the right direction, our gross profit margin percentages are going in the right directions and our staffing costs are going in the right direction,” he said.
Including non-operating revenues and expenses, the liquor fund saw a net increase of roughly $47,000 in the first half of the year, according to the report. The increase more than doubled the rise by this time last year but is less than a third of the amount budgeted for 2019.
Liquor revenues for the second quarter were slightly ahead of budget but not enough to offset the first quarter.
“It’s really disconcerting to have it be such a drastic difference from the actual to the budget halfway through the year,” Councilmember Christine Kelly said.
Savage Finance Director Julie Stahl and Larson said the budget doesn’t account for the seasonal nature of the liquor business, and they expect to close some of the gap in the second half of the year.
Stahl said the first half of the year also brought $29,000 in one-time expenses related to the staff restructuring in May.
“We are about to see a bigger swing in the right direction,” she said.