The money turned up during a review of old local improvement district accounts.

Like an old coat pocket that has the happy ring of old forgotten change, the city recently found a pleasant surprise tucked in its budget.

“At one point in the (budget) process, I said, ‘Well, what’s this money doing here?’” city Finance Director Elray Konkel said of the moment when he discovered nearly $600,000 in additional funds.

While amounting to less than 1 percent of the city’s budget, the money could provide a substantial boost to capital projects left at the wayside for lack of funds.

The City Council will discuss what to do with its windfall at tonight’s council meeting, which starts at 7 p.m.

According to Konkel, the money had been collecting over the last quarter-century as leftover funds from local improvement districts, which are typically used to raise additional dollars to build sewer infrastructure or other one-time improvements.

The accruing funds, which came to about $24,000 per year, had long been tied up in debt payments. The funds were freed from these and other obligations sometime in 2004, but went unnoticed until recently.

“Sometimes in government that happens,” Konkel said, who also spotted millions of dollars in an over-supplied pension fund while working for a California city years ago.

Konkel advised restraint when he exposed the gold mine to the California city’s council.

“I convinced them not to go hog wild with it,” he said.

That’s because the surprise funds were a one-time deal and couldn’t be counted on in future budgets.

He advises the same conservative spending plan for Bainbridge’s much more humble gains.

“You want to do capital projects with it because it won’t be here next year,” he said.

Council Chair Bob Scales favors putting some of the money into a fund earmarked for open space acquisitions during last year’s budget process. Scales expects that the open space fund will shrink in the near future as the council tries to finance other projects that have been deferred for lack of staff and funding.

“If we put this in the general fund, we may use it to replenish money we took from open space to do other capital projects,” Scales said.

About $400,000 of the LID funds are spoken for in the 2006 budget, but the finance department’s early estimates left out about $192,000. That’s the amount the council will now have to find a place for, Konkel said.

“I said $400,000 as a conservative estimate in budget documents,” he said. “But we did an accounting correction and cleaned that number up and it turned out to be more.”

Konkel pledged that his department will keep a closer eye on excess LID dollars and send them to the general fund on a regular basis.