During a working session on Monday, Bemidji City Council was guided through the expected changes in income and expenditure expected for the next year, as well as the impact of the costs at the Sanford Center. These factors were explained by City Finance Director Ron Eischens, who concluded the presentation with a description of the expected tax levies for 2022.
Eischens says the city’s revenue is set to increase by $ 420,000 while spending is likely to increase by $ 798,000.
Personnel costs are the main driver that drives spending soaring. Salary increases based on a labor market study combined with the cost of living increases have a tax effect of $ 333,000.
In addition, the city is creating new jobs, including a deputy fire chief, a deputy mechanic and a deputy city manager. In his comments, Eischens stated that staff costs account for nearly two-thirds of the city’s general fund budget.
Taking both income and expenses into account, Eischens said a tax hike to $ 378,000, or 5.8%, would be higher than the $ 6.5 million approved for 2021%.
For a $ 139,000 home, a 4.8% increase would translate into a $ 13 tax increase. For a company valued at $ 383,000, 4.8% would be an increase of $ 76.
However, Eischens also found that the Sanford Center, a city-owned event facility and operated by Iowa-based management company VenuWorks, has capital requirements in excess of $ 1 million. Overall, the facility’s officials have asked for nearly $ 1.4 million in maintenance and upkeep costs.
If the entire amount were included in the tax for 2022, the tax increase would be 26.3%, according to Eischens.
During the meeting, councilors said such an increase was not feasible, but argued that an investment was necessary to keep the Sanford Center up and running.
“We are at this point, after we kicked him out on the street, that we have to bite off a big chunk of that apple,” said Emelie Rivera, councilor for Ward 4. “I think we have to be realistic about this Needs to be met so that we have a viable center. “
In recent years, Eischens said the city had budgeted $ 180,000 for the Sanford Center’s capital needs. Should the Council reduce this amount for 2022, it would increase the tax hike by around 2.5%.
In his comments, Mayor Jorge Prince said the city could potentially round the amount up to $ 200,000, which would increase the levy to around 8.5%. Ward 2 Josh Peterson agreed that the tax increase should be closer to 8.5%.
Rivera, meanwhile, said it would support a tax hike closer to 10% to meet capital needs. In his comments, At-Large Councilor Daniel Jourdain also said he would support an increase closer to 10%.
During the discussion of the Sanford Center’s tax needs, the issue of an accommodation tax to support the facility was raised. The city has historically advocated a hospitality tax on hotels or restaurants to generate more revenue from visitors to Bemidji.
Currently, an annual operating investment to cover losses at the Sanford Center and all maintenance needs is paid through property taxes. During a hearing session in mid-July, community members expressed their openness to a hospitality tax but asked for a third party review of the facility’s operations before the city imposes a new tax.
City manager Nate Mathews said Monday the issue of a third party review is up for discussion and would likely be paid for by the city’s liquor store’s revenue. Such a study would likely take 60 to 90 days.
However, if a fast-track hospitality tax were to be approved in 2022, the city would likely not have a financial impact until 2023.
After hearing the advice, Eischens said his office would come back with details of what an 8.5% to 10% tax hike would look like. The council is due to vote on a provisional tax levy in September.
City law prohibits the council from increasing the tax amount after September, but it is allowed to decrease the number before the final vote to approve in December.