Skoe sees problems in report on economic impact of smoke-free ordinances

Smoke-free ordinances caused little or no effect on restaurant and bar sales in Minnesota, a new report says this week. The report, given to lawmakers, comes as the Minnesota Legislature grapples with a proposed statewide smoking ban in bars, res...

Smoke-free ordinances caused little or no effect on restaurant and bar sales in Minnesota, a new report says this week.

The report, given to lawmakers, comes as the Minnesota Legislature grapples with a proposed statewide smoking ban in bars, restaurants and workplaces.

The report, released Monday by ClearWay Minnesota, the successor to the tobacco settlement-funded Minnesota Partnership for Action Against Tobacco, includes Beltrami County as one of three counties and four cities with smoke-ordinances studied.

"There was no apparent economic impact as a result of the Beltrami County smoke-free ordinance, which was effective on Jan. 1, 2005," the study notes.

The report viewed aggregate data of population, sales and eating and drinking establishments and jobs from 1994 through 2005 and was conducted by the Minnesota Institute of Public Health and sponsored by ClearWay Minnesota.


At least one legislator casts doubt on the report, naming a list of Beltrami County establishments that lost business after the county's smoke-free ban was put in place.

The report gives a county average that includes establishments in the city of Bemidji, Sen. Rod Skoe, DFL-Clearbrook, said Monday as the report was presented to the Senate Business, Industry and Jobs Committee. It then applies the data "as if there is no economic impact, but it appears to me the smoking ban kind of picks some winners and losers in the food and beverage industry."

The report shows aggregate sales for eating and drinking establishments in Beltrami County from 1994 o 2005 increased by 54.3 percent to $44.9 million, an average annual increase of about 4.9 percent. Adjusted for inflation, the trend appears flat over the period.

From 2004 to 2005, the increase in aggregate sales was $1.02 million, or 2.5 percent.

The figures, however, only reflect one year -- 2005 -- under a smoke-free ban, which was modified to allow smoking in bars and restaurants from 8 p.m. to 3 a.m. A full ban took effect last month.

The study shows the aggregate per capita sales in Beltrami County eating and drinking establishments was $709 for 2005, a slight decrease from $733 in 1994 in a trend that over the years bounced from a high of $733 to a low of about $580 in 1996. The trend, however, for the past three years, including one under the smoke-free ordinance, shows a slight rise.

It also showed the number of employees in eating and drinking establishments in the county growing by 11.7 percent from 1994 to 2005, and the number of eating and drinking establishments up by 12 percent during the period. While the trend dipped slightly in the early 2000s, it has been steadily increasing the past three years.

The more than 80 eating and drinking establishments in 2005 is the highest since 1994, and the number of employees at about 1,300 is about equal with the mid-1990s.


Skoe, however, questioned the data, saying more than a few county bars and restaurants have lost business since the county enacted its smoking ban.

"While the county average might be OK, there certainly have been winners and losers within the mix," Skoe said.

A business in Waskish lost $46,000, down 17 percent in food sales and down 29 percent in liquor sales, Skoe said. "During the time when the walleye season was opened up, they should have been having an increase."

And, "other bars near Bemidji (have) sales down," Skoe said, citing one with $78,000 in lost revenues and laying off people, a Tenstrike establishment having sales down 40 percent and going from two full-time workers to three part time, a Turtle River establishment down 35 percent in revenues and the Turtle Creek Saloon down 38 percent.

"The Bemidji Legion is down $10,000 a month," Skoe said. "Gambling receipts are down from $2.8 million to $1.3 million."

Also in Bemidji, Skoe said Keg 'N Cork lost $56,000 in gross revenues in 2005 but got $18,000 of that back in 2006. "Lost customers no longer patronize their business."

Sen. Ron Latz, DFL-St. Louis Park, a bill co-sponsor, said nationwide statistics show a business affected by a smoking ban will lose revenues in the short-term, but a year or more later will gain it back.

"We will create winners and losers within the state if we pass the statewide ban," Skoe said. "As we look at this, we have to know that there's going to be some pretty significant negative ramifications to businesses in some parts of the state."


Mike Bromelkamp, one of two certified public accountants contracted by the Minnesota Institute of Public Health who presented the report to the panel, said he understands individual businesses will be affected but that the charge of their study was to look at county and statewide aggregate data.

"While we can't suggest whether individual businesses have been economically impacted, it certainly wasn't within the scope of this study and we certainly can understand that," Bromelkamp said. "It would be impossible to study this unless bar owners were able to open their books for analysis, and that was not within our charge."

But he noted that "individual businesses are affected by many factors -- you've got competition, road construction, the economy, the weather, etc."

He suggested that there will be winners and losers -- until there is a level playing field with a statewide smoke-free law.

In looking at statewide figures, the study also concludes that smoke-free ordinances have little effect on statewide bar or restaurant business.

In the smoke-free jurisdictions studied, the report shows virtually no change in aggregate sales from 2004 to 2005 in Beltrami and Hennepin counties and Golden Valley and Moorhead. It shows an increase in sales Bloomington and Minneapolis, and a decrease in sales in Ramsey County.

"It is apparent that there was little change in the sales percentages, with some slightly increasing and some slightly decreasing," the study said of the seven jurisdictions. "It appears that these jurisdictions, existing in a state environment where many of the remaining jurisdictions allowed smoking, did not lose significant market share."

Ramsey County had the largest decrease from 2004 to 2005 as a share of Minnesota total sales, from 12.65 percent to 11.87 percent, but that the decrease is in line with historical trends since 1994.

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