The primary focus of the meeting was the discussion of the 2025 fiscal year budget. Connie, a city official, presented a comprehensive comparison of the actual expenditures from 2023 with both the adopted budget for 2024 and the proposed budget for 2025. The operating expenditures for the city were estimated to be approximately $13.5 million, an 8.04% increase from the prior year. The preliminary levy required to balance the budget was projected to be around $7.56 million. This preliminary figure was necessary to maintain budget balance but did not include additional requested increases from the library, Economic Development Authority (EDA), and airport.

Personnel services were highlighted as an area of increased expenditure, with nearly $700,000 more allocated despite the budget accounting for one fewer full-time employee. The budget included provisions for hiring part-time employees and adjusting wage ranges, along with anticipated increases in health insurance costs and workers’ compensation rates. Additionally, supplies expenses were projected to rise by $4,550, and service costs were set to increase by $287,600, with plans for these increases already factored into the capital fund.

Capital expenditures were also discussed, with no proposed increase to the levy for capital equipment and facilities. The revised budget included items such as a skid steer trailer and a scanning tool, while some previously proposed items were removed. The capital plan emphasized increased funding for long-term maintenance projects in parks.

Debt levy considerations were another focal point, with a noted decrease of $212,000 for the 2025 budget. This decrease would primarily affect debt payments due in early 2026. Other levies, including those for permanent improvements and the library, were under scrutiny. The library requested a modest 2% increase, whereas the EDA sought the maximum allowable increase under state statute. The airport’s request included significant additional appropriations from both the city and the county.

A notable part of the meeting was the discussion surrounding the city’s tax levy and its implications for future budget planning. It was emphasized that increasing development does not automatically lead to increased tax revenue for the city. The formula used to determine the city’s tax rate involves dividing the city’s levy by the total tax capacity. If the tax levy remains unchanged while the total tax capacity increases, the tax rate would decrease, and conversely, if the tax capacity decreases, the tax rate would increase.

A council member, Mr. Bevans, inquired about the relationship between the tax rate and the levy, expressing uncertainty about the tax rate’s relevance in determining required dollars. It was clarified that the municipality sets the levy amount rather than the tax rate, and while they are interrelated, the city does not control property values, which influence the tax rate.

The council reviewed the 2024 levy, which was set at $6,958,800. Projections for the 2025 tax rate suggested an increase if the tax capacity rises by 5% or more. The deadline for setting the preliminary levy was September 30, with potential establishment during the September 16 council meeting and the option for a special meeting if necessary.

A point of the meeting was the discussion on the potential divestment of the airport to the county. The current levy for the airport was recommended to be maintained at $146, with a transition cost of approximately $889,000 considered. The council debated the long-term financial benefits of divesting the airport, highlighting that maintaining it would impose annual costs on taxpayers. Further discussions on this topic were planned for upcoming meetings to coordinate with the county’s timeline for levy setting.

Personnel matters related to Brainerd Public Utilities (BPU) were also addressed, confirming that current discussions were not reflected in the levy considerations. The BPU budget presentation was scheduled for the first meeting in December.