BEMIDJI-Bemidji officials reviewed the city's financial past and previewed its future Monday.
During a work session, City Finance Director Ron Eischens gave a presentation covering the 2017 fiscal year and matters that will come up during the 2019 budget discussion. Regarding the latter, Eischens discussed a variety of cost drivers that the City Council will need to work on in the year ahead.
At the top of the list for 2019 are personnel costs. Eischens said Monday this can range from the cost of an upcoming job study, to consideration of compensation for paid on-call firefighters. Additionally, the Legislature may increase employer and employee required contributions to the Public Employees Retirement Association of $21,000 and the workers compensation premium increases at an estimated $30,000.
Another personnel matter that generated more discussion from the council was the idea of adding a community development director position to the staff, at an estimated cost of $100,000. During the conversation, members of the council talked about what role the person would have and how involved they would be with economic development.
"I'm not saying that this position isn't needed at this time. But, I'm saying that this position needs to be clearly defined and given a good scope," Ward 2 Council member Roger Hellquist said. "Then, we also need to know how exactly we're going to pay for this. This is something that has to be well thought out. Maybe it's a situation where we need to cut out specific things and leave those to Greater Bemidji (Economic Development)."
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Other cost factors for 2019 consideration include:
• Increased costs for misdemeanor prosecution services from Beltrami County, or possibly contracting with private legal professionals.
• Increasing the park budget by $15,000 for landscaping maintenance at the South Shore Park area.
• Evaluating costs related to developing the Rail Corridor area south of downtown.
• The future of Neilson Reise Arena.
Ideas for additional sources of revenue also were presented. Eischens said the city has the ability to increase gas and/or electric franchise fees beyond the current 5 percent level. A ¼-percent increase in fees, Eischens said, would generate $55,000, equal to a 1 percent tax levy increase.
Eischens also included projects that need addressing in the coming years, such as the replacement of underground street light wiring in the Industrial Park, estimated at $300,000, or the city's Americans with Disabilities Act transition plan, coming to about $30,000.
Eischens said the council is scheduled to revisit the topic in June.
A look at 2017
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For the past year, Eischens told the council that while $405,000 was the projected surplus of the city's general fund, the surplus ended up coming to $769,000. According to Eischens, the number was caused by a number of departments coming in under budget.
During the work session, the council authorized allocating $283,535 of the surplus to a designated city fund balance, which is primarily used for cash flow in cases of unanticipated expenses. The other $485,533, meanwhile, was allocated to an undesignated fund balance, which can be used as the council deems appropriate. For example, it could be used for 2019 budget items.
The other part of Eischens' report on 2017 finances was related to the city liquor stores, which ranked 13th in the state for sales, including the metro area. Eischens said that sales increased by 2.3 percent last year, with operating profits of $693,000.
In 2017, the liquor profits contributed $451,000 to reduce property taxes, equal to a 7.8 percent tax levy. The liquor fund now has $683,000 in cash, which is lower than normal because of a land acquisition of about $789,000 for the new store to be built on Paul Bunyan Drive.
Future liquor profits, Eischens said, will pay bonds sold to finance costs of the new building. The amount of bond financing will be determined by the council after construction bids are received.
