Increased 2024 tax levy on the table for Bemidji

BEMIDJI — As discussion began on the 2024 city budget, the Bemidji City Council debated what percent increase would be acceptable for next year’s tax levy during its work session Monday night.

While some councilors were hesitant to support an increase of anything but single digits, others were open to considering up to 15% to meet the city's ongoing needs.

The meeting began with a presentation by City Financial Director Ron Eischens, who provided an overview of the city’s costs, revenues and needs while also warning the council that there were difficult decisions ahead.

“You have many hard decisions ahead of you,” Eischens said, explaining that with everything currently considered in the budget, the city would be looking at a shortfall of around $1.7 million.

This shortfall comes from several areas as multiple departments struggle with understaffing, operational costs continue to increase and the city faces looming capital improvement projects. Each of these contributed to an initial proposed levy increase of 22% for 2024.

“We know that’s not reasonable, but we need to start somewhere,” Eischens explained.

Just the required personnel costs, which relate to cost of living increases and union contract terms, amounted to an 8% levy increase — already 3% higher than the total levy increase in 2023.

But the needs the city and its departments face are considerable. Understaffing has led to safety concerns at the Bemidji Fire Department, increased costs place the cycle for street reconstruction at 150 years and multiple departments are struggling with employee recruitment and retention.

Of these concerns, supporting the police and fire departments was something several councilors expressed a desire to prioritize.

“Being short in these departments has greater risks for our citizens than in other departments,” said Mayor Jorge Prince. “When I think about what a city’s responsibilities to its residents are, public safety is always first and foremost.”

“Our police and fire department staff deserve every accommodation they can possibly get, including the staff they need to keep themselves safe,” shared Ward 5 Councilor Lynn Eaton.

Another item councilors expressed an interest in prioritizing was investing in recruiting and retaining employees, with the hope that it would decrease soft costs associated with hiring and training new staff.

But even with agreement on priorities, councilors shared different numbers for what levy increase they would be comfortable with placing on taxpayers.

“I don’t see myself supporting a 22% levy increase in the face of everything else that’s happening. I have a hard time going into double digits,” Prince shared.

Ward 2 Councilor Josh Peterson shared that he was also hesitant to increase the levy beyond 9%, and At-large Councilor Audrey Thayer shared that at this point she would not be comfortable going above an 11% increase.

Other councilors were open to higher numbers if it meant meeting more of the city's needs, like Ward 4 Councilor Emelie Rivera.

“We have to make hard decisions, I feel we could have made a better decision last year when we aimed so low. We’ve put things off,” Rivera said. “I’m fully comfortable up to a 15% levy increase at this point. We can’t keep asking employees to do more with less.”

Councilor Eaton shared that he would be interested in seriously considering a levy increase between 10 and 15%, and Ward 3 Councilor Ron Johnson shared that he wasn't concerned if the levy increase entered double digits.

While debating the exact number for a levy increase, members of the council also acknowledged the hard work city staff put into reducing costs, and that department heads treated the budget process with a great deal of consideration.

“Staff doesn’t ask for stuff willy-nilly. I put a lot of trust in their judgment,” Eaton said.

As the discussion continued, Eischens shared his hope that the numbers in front of the council would improve after more information about local government aid and other funding came out, adding that the city could expect an increase in LGA of about $330,000 for 2024.

If these expected numbers are confirmed, the high estimate of a 22% increase would be brought down considerably by their inclusion in the budget.

After hearing the council’s opinions, staff will return with another option for the budget and levy increase for consideration. Since this is the beginning of next year’s budget process, a formal decision on the levy will not be made until September when the preliminary budget is passed.

“We’re going to have to prioritize, that’s pretty clear to us,” Prince said. “Finding that balance is going to be a challenge, every percent has a potential impact.”