Bemidji to receive more LGA next year
BEMIDJI —City councilors agree that having more Local Government Aid dollars flow from the state to Bemidji is a good thing.
But how it affects their budget and the services they provide has yet to be seen.
The state Legislature adjourned late Monday after approving $80 million more to city governments across the state. The formula for how that money is distributed also was changed.
Bemidji is set to receive $305,412 more in LGA next year than they will receive this year, bringing its total up to more than $3.2 million, according to Minnesota House Research staff. It will be the most the city has received since 2007.
“We absolutely depend on it,” at-large Councilor Jim Thompson said of LGA funds.
Cities have seen LGA payments from the state decline over the past decade. Many blame that trend for increased property taxes and reduced services.
In 2002, the state sent $565 million to cities, compared to $427 million this year.
The council will meet in mid-June to discuss its budget outlook and give staff direction on next year’s budget, said city finance director Ron Eischens.
Ward 5 Councilor Nancy Erickson said she would like the additional LGA used for some type of property tax relief, but noted that the city has other obligations such as paying for increased union contracts in the next three years.
“I would see it as providing some property tax relief,” Erickson said, adding that property taxes are helping to subsidize operations at the Sanford Center.
Likewise, Ward 4 Councilor Reed Olson said he would like to alleviate the burden of the Sanford Center somewhat from city property taxpayers. He noted that the city wasn’t granted permission from the Legislature to impose a hospitality tax, which would have helped pay for the facility’s operations.
He also said if he had a “wish list,” he would like to see the city’s plans for future park development come to fruition, as there are not enough sales tax revenues to complete those plans. “They are not fully funded,” Olson said.
Mayor Rita Albrecht was hesitant to say what she would like to do with additional LGA funds before conferring with staff and councilors.
“I prefer to have the information to come from our department heads,” Albrecht said. “And we’ll have an understanding about what the needs of our departments are.”
She did say, however, that she would like to see an additional staff member added at the Bemidji Public Library. That position would be funded between Beltrami County and the city, she said.
“Our library is currently really on a skeleton crew and they really need at least one additional staff person to really be much more effective,” she said.
Ward 2 Councilor Roger Hellquist said discussions over the LGA formula have happened for “quite a while.”
“But we don’t have any real plans for it,” Hellquist said. “So, there’s always a place we could use it.”
The Legislature also made cities exempt from paying sales tax. That would mean about $150,000 to $200,000 in savings for Bemidji, Eischens said.
He noted, however, that not all of those savings have a direct property tax impact as many purchases are made out of utility funds and other revenue sources.
But the Legislature added a catch to those two provisions: Cities must limit how high they set their property tax levies next year.
“The Legislature believed that the increased aids to local governments and sales tax exemption for local governments provided in the 2013 legislative session justified a one-year restriction on local government levies,” according to a one-page breakdown from the Coalition of Greater Minnesota Cities.
Eischens said the details about how that levy limit will affect Bemidji will become clearer this week. But Chris Henjum, a policy analyst with the CGMC, wrote in an email that the limit can’t be lower than what a city set its levy at in 2013 or 2012.
Bemidji’s property tax levy was set at $4,176,998 for 2013.