The meeting delved into the 2026 budget proposal, highlighting the importance of the recreation park’s projected revenue surplus of $677,000, which plays a role in offsetting the city’s expenses. Without this contribution, the city would face an increase in expenses and corresponding levy hikes. The proposed levy for 2026 is set at $1,145,181, with $812,000 allocated for general operations and $332,000 for debt payments. The city administrator explained that despite the levy increase, the effective tax rate is decreasing, a complexity that could challenge public understanding of tax implications.

The council reviewed debt payments, including a $35,000 payment on a 2008 loan from the Minnesota Municipal Utility Association, set to be fully paid off by 2027, and a 2017 bond financing the public works garage, with a final payment scheduled for 2033. Another bond from 2019, dedicated to business park improvements, requires annual payments of approximately $120,000, with the last payment due in 2031. The Fifth Avenue reconstruction project, financed through a 2023 bond of $160,000, prompted discussion on coordinating utility replacements with road reconstruction.

The council also discussed the city hall project, carrying a total payment of $384,000, divided between capital improvement plan debt and liquor revenue debt. The annual debt payment total is $1.18 million, with contributions from levies, utilities, and other funding sources. It was noted that the levy often exceeds the payment requirement by about 5% to accommodate unpaid property taxes.

Reflecting on the budget process that began in June, council members expressed satisfaction with achieving a target levy increase under 3%, considering current economic challenges. The personnel committee reached a tentative agreement with the Ask Me union on a three-year contract with a 3% wage increase, pending membership approval.

The council also celebrated a $1,066,560 grant from the Greater Minnesota Regional Parks and Trails Commission for phase one of the park master plan. This phase will include improved signage and the construction of a new bathhouse, with construction anticipated to extend into 2026 or 2027. Park revenue was reported to be up by 1% compared to the previous year, although October showed a slight downturn, a potential concern for overall revenue.

In other developments, the Grand Marais golf course reported a revenue increase of approximately $30,000 compared to the previous year, attributed to good course conditions and increased membership. A finalized 3% rate increase across park services was announced, affecting rental fees for facilities like the pavilion and recreation building.

The council discussed upcoming public utilities projects, including a grant secured for the electrical department amounting to $50,000, intended to evaluate the electrical load within city facilities. The grant, facilitated through a Department of Energy program, aims to explore potential expansions to electricity categories and assess future electricity demand scenarios, including electric vehicle charging infrastructure and battery storage usage. The project is expected to last between 18 and 24 months.

The meeting also touched on the Sawtooth Bluffs project, with county progress requiring further discussions about the city’s role, likely postponed until January. Despite an unsuccessful grant attempt for Third Street improvements, the council is considering next steps following an improvement hearing and addressing necessary engineering work and assessments with property owners.