At the forefront of the meeting was a discussion on the proposed 2026 maximum property tax levy, resolution number 2025-68. This marked the first official action related to the 2026 budget, a topic that has been a focal point since mid-year. The council examined several objectives designed to support the city’s mission of being the best small town in Minnesota, including maintaining high-quality service levels, funding new programs only after ensuring existing ones are adequately supported, and developing a sustainable long-term budget plan. The emphasis was placed on avoiding drawdowns from general fund reserves to maintain a high bond rating.

A notable aspect of the tax levy discussion was the city’s tax levy policy, established in 2015, which aims to limit tax levy growth by capturing new community growth, such as new buildings and houses. The rationale is that resources generated by new developments should address the increased service demands without burdening existing properties. This year is significant as it marks the conclusion of the city’s building improvement program, directly influencing levy considerations.

Further insight into the city’s financial status was provided with comparative data from the previous year’s budget. Initiatives like the million-dollar capital asset maintenance program, started in 2017, aim to preserve community assets such as playgrounds, roads, and trails. The presentation also highlighted efforts to address a staffing shortfall, with 19 positions identified over four years to close service provision gaps. Notably, general fund reserves have increased significantly, reaching $6.9 million in 2024, up from $1.9 million in 2020, with a target reserve level of 40% nearing achievement.

The council also discussed local government aid (LGA), which the city has historically lost over a million dollars annually. The city has managed this shortfall through local levies and staffing adjustments. The current population estimate is approximately 29,830, likely surpassing 30,000 with recent development permits. Demographic trends showed a decrease in household sizes, potentially due to new developments like Adalwood, which features smaller households.

The conversation moved to the impact of community growth on market values and infrastructure. Significant growth in electricity usage was noted, attributed to new buildings and existing businesses, highlighting the expansion by companies such as United Health Group. This growth reflects the broader community development, which helps reduce the tax burden on current residents. A participant confirmed that although data centers contribute to the increase, consistent growth from existing industrial sectors has been observed.

Market values experienced a 7.51% increase, with residential properties seeing a 6.78% rise, partly due to new construction. Commercial and industrial properties reported a 5.23% increase, with apartments seeing a 20% rise driven by new projects. The total market value in the community reached $5.2 billion.

The meeting also addressed the ongoing improvements and future development plans. The electric fund transfer, which includes a 5% franchise fee, is expected to increase, reflecting higher electric sales due to new developments and existing businesses. This transfer is anticipated to rise from $3 million in 2013 to approximately $5.5 million in the upcoming year. Future residential developments are expected in High Point Vista and Fultonwood by the next summer.

A significant portion of the meeting focused on service enhancements, particularly in public safety. The transition of the fire department to a 24-hour duty crew model was highlighted as a major improvement, expected to enhance service delivery by providing round-the-clock coverage rather than the current limited hours. The addition of a co-responder social worker within the police department was noted as a critical step toward addressing mental health challenges, aligning with trends among larger departments.

The council also emphasized the importance of modernizing city facilities, with a focus on the public safety building due to inadequacies in the current police department location. Plans for the municipal service building, library, and City Hall renovations were outlined, with timelines for these projects extending into the next decade.

The budget presentation highlighted a projected general fund and Economic Development Authority (EDA) levy of just under $24 million, representing a 14.606% increase. However, new growth in the community is expected to mitigate the impact on homeowners.