Savage city officials are looking to cut costs in the city’s municipal liquor monopoly and are still considering ending the operation entirely.
Officials have been keeping a close eye on struggling sales since November, when the council decided to wait a year before any decisions about the operation’s future. This week, Mayor Janet Williams said she doesn’t want to wait a year to make a decision, and the council looked at options to cut staff positions.
Between 1998 and 2010, the liquor operation generated over $4.6 million for community funds. The operation helped service the debt to construct the Savage Library and Environmental Learning Center, for example, but Williams said times have changed.
“I believe the support isn’t there from the public,” Williams said, adding that liquor sales are something many people believe the government shouldn’t be involved in.
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.
Officials began the operation in 1935 to control the sale of liquor and raise money, but it’s been around a decade since profits have been enough for city officials to transfer the funds, according to City Administration Brad Larson. The operation hasn’t been profitable at all since 2015.
In 2018, the liquor fund sustained an operating loss of just under $19,000 compared to an expected profit of around $219,000.
The operation has sustained an operating loss of around $16,000 in the first three months of 2019. However, the first quarter is not typically strong for liquor sales, Larson said.
Road construction, weather, lack of marketing and competition from stores in neighboring cities are also factors in struggling sales, officials have said.
At the work session, Councilmember Bob Coughlen said he wanted to let things play out for the full year before making any big decisions.
Councilmember Christine Kelly suggested looking at deeper cuts to labor costs, which swallow up roughly 12 percent of sales.
Despite renting a space at Hy-Vee, officials say it would be possible in theory to end the liquor operation anytime. Folding the municipal liquor operation would allow other corporations such as Hy-Vee to open their own store.
The council will discuss the operation at the May 6 meeting.
Larson added rent is increasing at Hy-Vee by around $50,000 this year, and Williams said profits are not going to keep up with rent increases.
City officials are considering reducing liquor store staff time by around 9 hours per week for an estimated $9,000 in savings.
Additional savings of between $24,000 to $36,000 are also being considered by eliminating an assistant manager position and adding back some hours to lower-paid positions.