Tami Ross shopped for wine at the Lakeville Municipal Liquor Store in 2013. With $15.28 million in sales, Lakeville topped the list of the 190 Minnesota cities that run their own liquor stores. (Star Tribune/The Minnesota Star Tribune)

Municipal liquor stores in Minnesota brought in $360.2 million in 2018 as they reported record sales for the 23rd straight year, according to a state report released Wednesday.

Statewide sales were up $11.3 million from 2017, a 3.2% increase, despite a drop in the number of municipal liquor stores. Altogether, municipal liquor operations brought in a combined net profit of $29 million last year, according to the state auditor's report.

"It's a record year. So it shows that on average, we have healthy municipal liquor stores," State Auditor Julie Blaha said in an interview, noting that $21.7 million in proceeds were poured back into local communities.

Twin Cities suburbs brought in the most sales of the 190 Minnesota cities that run their own liquor stores.

Lakeville topped the list with $15.28 million in sales, the report showed. Edina ($13.40 million), Richfield ($11.56 million), Eden Prairie ($10.85 million) and Apple Valley ($9.45 million) rounded out the top five.

Only 19 metro cities run municipal liquor stores, but theirs are larger and more profitable than those in the rest of the state. Metro stores accounted for 35% of total sales and 38% of net profits last year, the report showed.

For metro municipalities, these liquor stores generate money to supplement revenue from taxes and fees. The money may be used to lower taxes or fund special projects.

"Customers respond to that. They like the fact that it's … sold here by people that live here and the profits stay in the community," said Mike Larson, liquor operations manager for St. Anthony Village Wine and Spirits. The city's stores near northeast Minneapolis reported nearly $6 million in sales and more than $260,000 in net profits last year.

There were 38 cities that reported losses in 2018, down 16 from the year before. Robbinsdale was the only metro city to post a loss, the report showed.

Robbinsdale City Manager Marcia Glick called the $31,000 loss an "anomaly" that came from the city moving its liquor store from one shopping center to another. The new location is "much more profitable than the old location," she said, and the city expects it to profit this year.

Among the Greater Minnesota cities that posted losses last year, two-thirds have populations below 1,000. Blaha noted that the goal of small-town stores may not be profit. Municipal stores provide access for communities that struggle to attract privately run establishments.

Per state law, cities must conduct a public hearing on the future of their store if it lost money in at least two of the past three years. The report identified 36 cities, including Savage, that should conduct hearings in 2019.

"There's probably a different story in each store," Blaha said. "Local communities need to keep … revisiting why they have them and if they're achieving the goals that they are hoping for."

Ryan Faircloth • 612-673-4234 Twitter: @ryanfaircloth

Jesse Martin picked up some beer in the Edina Liquor store in 2015. Only 19 metro cities run municipal liquor stores, but theirs are larger and more profitable than those in greater Minnesota. (Star Tribune/The Minnesota Star Tribune)