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Bemidji City Council to review surplus revenues, 2013 budget

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The city of Bemidji ended with a surplus of nearly $75,000 last year.

Considering staff was projecting a deficit just a couple of months ago, the surplus is welcome.

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"Prudent budget management by departments and higher than anticipated revenue collections contributed to the turnaround," reports Ron Eischens, finance director, in a memo to the Bemidji City Council.

The City Council will meet in a 5:30 p.m. work session Monday at City Hall to review the year-end financial report for 2011 and begin the early budgeting process for 2013.

The general revenue fund was bolstered as property tax collections exceeded projects by more than $100,000, due mainly to the collection of delinquent taxes. Yet revenue overall was about $23,000 short due to reduced interest income based on low market rates.

Most general expenses were under budget, but the police, fire and street departments were over budget.

If the surplus is allocated toward city reserves, it would give the city more than $4.8 million in reserves, exceeding by $18,000 the city policy of saving half of the previous year's expenses in the reserve fund, Eischens reported. He recommends allocating about $5,700 of the surplus to the city's capital obligation with the rural fire department and leaving the rest in the reserve fund.

The city's two liquor stores had profits of $640,000.

Statewide, the average profit margin for off-sale is 8.1 percent and Bemidji's was well over that at 12.8, Eischens reported.

"Bemidji's profit margin percentage is in the top nine stores statewide with populations of 5,000 or more," he wrote.

The liquor store funds are used to offset property taxes in a variety of ways.

In 2011, liquor funds were used in the following manners:

E A $275,000 transfer to the general fund to reduce the property taxes, equal to a 7 percent levy.

E $30,000 to playground equipment for the new North Country Park.

E $29,900 for other park improvements - such as Nymore tennis courts - and equipment.

E $17,000 for the city assessments related to the 2011 street improvement project.

The liquor fund now has more than $420,000 on hand, which, Eischens said, is more than necessary to meet the stores' operating needs.

He listed four projects which the city will need to allocate funding:

E $167,000 for a local match required for a $408,000 trail system grant.

E $30,600 remaining to be paid to cover $70,600 in trails and park improvements in the 2012 street improvement project. Already $40,000 is funded through capital improvement dollars.

E $15,000 for the city's share of lighting along the Lake Bemidji West Shore Trail, a partnership with Bemidji State University.

E In June, the council voted to designate 5 percent of all liquor store profits to be put toward donations. That fund will amount to $30,600 for 2011.

The work session will mark the opening of the 2013 budget-planning process.

Eischens said city staff will be working over the next months to prepare its 2013 budget, but council direction is needed.

He noted two top issues that will affect the 2013 property tax levy: annexation and bonds.

The City Council last week voted to initiate the first phase of annexation of Bemidji and Northern townships. That comes with costs to department budgets, Eischens noted.

Also, if no additional land is sold in the south shore by the end of the year, the city will need to levy $184,000 (a 4.6 percent levy increase) in order to comply with bond requirements, Eischens reported.

The city of Bemidji ended with a surplus of nearly $75,000 last year.

Considering staff was projecting a deficit just a couple of months ago, the surplus is welcome.

"Prudent budget management by departments and higher than anticipated revenue collections contributed to the turnaround," reports Ron Eischens, finance director, in a memo to the Bemidji City Council.

The City Council will meet in a 5:30 p.m. work session Monday at City Hall to review the year-end financial report for 2011 and begin the early budgeting process for 2013.

The general revenue fund was bolstered as property tax collections exceeded projects by more than $100,000, due mainly to the collection of delinquent taxes. Yet revenue overall was about $23,000 short due to reduced interest income based on low market rates.

Most general expenses were under budget, but the police, fire and street departments were over budget.

If the surplus is allocated toward city reserves, it would give the city more than $4.8 million in reserves, exceeding by $18,000 the city policy of saving half of the previous year's expenses in the reserve fund, Eischens reported. He recommends allocating about $5,700 of the surplus to the city's capital obligation with the rural fire department and leaving the rest in the reserve fund.

The city's two liquor stores had profits of $640,000.

Statewide, the average profit margin for off-sale is 8.1 percent and Bemidji's was well over that at 12.8, Eischens reported.

"Bemidji's profit margin percentage is in the top nine stores statewide with populations of 5,000 or more," he wrote.

The liquor store funds are used to offset property taxes in a variety of ways.

In 2011, liquor funds were used in the following manners:

- A $275,000 transfer to the general fund to reduce the property taxes, equal to a 7 percent levy.

- $30,000 to playground equipment for the new North Country Park.

- $29,900 for other park improvements - such as Nymore tennis courts - and equipment.

- $17,000 for the city assessments related to the 2011 street improvement project.

The liquor fund now has more than $420,000 on hand, which, Eischens said, is more than necessary to meet the stores' operating needs.

He listed four projects which the city will need to allocate funding:

- $167,000 for a local match required for a $408,000 trail system grant.

- $30,600 remaining to be paid to cover $70,600 in trails and park improvements in the 2012 street improvement project. Already $40,000 is funded through capital improvement dollars.

- $15,000 for the city's share of lighting along the Lake Bemidji West Shore Trail, a partnership with Bemidji State University.

- In June, the council voted to designate 5 percent of all liquor store profits to be put toward donations. That fund will amount to $30,600 for 2011.

The work session will mark the opening of the 2013 budget-planning process.

Eischens said city staff will be working over the next months to prepare its 2013 budget, but council direction is needed.

He noted two top issues that will affect the 2013 property tax levy: annexation and bonds.

The City Council last week voted to initiate the first phase of annexation of Bemidji and Northern townships. That comes with costs to department budgets, Eischens noted.

Also, if no additional land is sold in the south shore by the end of the year, the city will need to levy $184,000 (a 4.6 percent levy increase) in order to comply with bond requirements, Eischens reported.

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