Council considers 9.9 percent levy hike
The Bemidji City Council Monday night directed staff to consider a 2008 budget utilizing a 9.9 percent levy increase - although councilors would have preferred to consider no increase at all.
The city of Bemidji had been earmarked to receive $428,000 in Local Government Aid in 2008, but by vetoing the state tax bill, Gov. Tim Pawlenty canceled those funds.
Had the city received that funding, city residents would not have faced any levy increase next year.
"We have no control over what the governor is going to do - we just have control over this number here (the levy)," said Councilor Nancy Erickson.
Barring a special session, the city of Bemidji in 2008 will receive $190,000 less in LGA than it did in 2007 - and it also will not receive the $428,000 included in the budget bill.
To simply make up for the loss in LGA from 2007, the City Council would need to approve a 7.3 percent levy increase, said City Manager John Chattin.
To make up for the loss in LGA and to cover the increases in city staff's salaries and benefits, a levy of 13.1 percent would be needed, Chattin said.
"But for the governor's veto, we wouldn't be talking these double-digit increases," Chattin said.
Councilor Jerry Downs said he favored no increase at all. He said the city already initiated numerous projects, such as the improvements at Diamond Point and the proposed events center.
"Maybe we should take some time to focus on what we're doing," he said.
But other council members were comfortable with 13.1 percent. Councilor Ron Johnson said the city now is moving forward and he would not like to see it move in the other direction.
Erickson suggested that the council consider a budget plan utilizing a single-digit levy increase. After initially proposing a 10 percent increase, she lowered it to 9.9 percent.
Bemidji taxpayers last year saw an increase of 19.9 percent and a 4.9 percent increase in 2006.
"I don't think the general public is going to complain any more if it is 13 or 9.9," said Councilor Roger Hellquist.
But Erickson said that asking for a 9.9 percent increase would "force people to prioritize."
"It's a challenge to staff to see if they can meet it," said Erickson, who stressed that 9.9. percent was "not a fake number - it's a real number."
The consensus of the council, which on Monday was short Mayor Richard Lehmann and Councilor Onen Markeson, was to ask staff to develop a budget utilizing a 9.9 percent increase.
The City Council is approaching this year's budget process differently. In previous years, department heads had presented their budgets to the council already containing the expenditures they deemed appropriated.
Chattin, who has not previously gone through the budget process with the Bemidji City Council, said he would "like to flip it and turn it around a bit."
Chattin instead asked the council to determine a levy amount with which it would be comfortable.
"This is a wonderful way of looking at it," Erickson said. "I like this much better. It lets department heads know the sky isn't the limit."
Downs said the new system makes more sense. "You run a household based on the amount of income."