The Bemidji City Council approved recommendations from staff on how to spend a surplus of over $1 million.
The $1.1 million surplus is from budgeted staff time money not needing to be spent thanks to $1.2 million in CARES Act funding.
City Finance Director Ron Eischens said $115,000 of the funding was spent on PPE and technology to allow staff to work remotely, and the rest was used on staff hours directed to COVID-related activities.
The surplus will be divided into two “pots,” one for the general fund to restore a 50 percent fund balance, and the rest will be put towards paying down the South Shore bonds.
The City Fund Balance Policy states that the city should strive to maintain a 50 percent fund balance of the next year’s budget.
The fund balance can be used for cash flow purposes, such as internal financing and emergencies, as well as to pay bills.
The South Shore land, according to Eischens, was purchased just before the recession of 2008, which resulted in the land “not selling at the price or pace that was originally predicted.”
The bonds should be paid off in 2023 but the tax levy for them could have extended beyond that, as the South Shore land bonds have a negative cash balance of almost $300,000.
The council directed staff to use $450,585 of the surplus toward the fund balance, and the other $642,424 toward the land bonds.
