Go ahead and get started to the flag of the United States of America and to the republic for which it stands. One nation under God, indivisible, with liberty and justice for all. Can you do the roll call?
Mr. Steinberg here. Mrs. Rooric here. Mr. White here. Mr. Lewis here. Mayor Whittington here. um look for the approval of the agenda or if there's any other items. Hear that
now? I'll make a motion to approve the agenda. Second and second. All in favor? I opposed. All right. New business. Hot topic 2026 budget.
All right. Uh mayor and city council, thanks for your time this evening. Um the work session tonight is our second one um for the preliminary budget for the 2026 fiscal year. Um you'll remember a couple weeks ago we met and we
reviewed each of the department requests and um at that time uh there was a proposed 7% property tax levy. Um there were some changes that were made following that mean. We'll kind of go through that tonight. Um the main thing to remember uh following the conclusion
of discussion this evening will need a motion from the city council to certify the preliminary tax levy to the county uh which is due by September 30th. Um I'm just going to kind of recap again what we talked about the last meeting. So just a reminder um that we have we're
required to prepare and adopt a preliminary budget and tax levy certify that to the county by September 30th. Then between um the time that that's certified and um December 29th, the city council then moves on to um prepare the
final budget and tax levy. Um once the preliminary tax levy has been certified, it can't be increased, but it can be um it can decrease. So um when we talk about the tax levy, we're talking about just the general
fund. We're not talking about water, sewer, storm. Um, so general fund, EDA fund, and debt service. And, um, as I just mentioned a little bit ago, we have to work from this point forward on the final levy and, um, and
budget. And so, there's going to have to be a truth and taxation hearing. And I did go ahead and schedule that for December 1st. Last year's final tax levy was set at $1,287,042 and that total a 14% increase from the
year prior. So our proposed preliminary levy for 2026 is sitting right now at 1,386,788, which ends up being about a 7.75% increase over 2025. And then I go on to outline in my memo
the general fund would increase about a h 100,000 $100,525. The EDA levy would be the same at 20,000 and then debt service um slightly decreases. So in total we're looking at um a change
from 2025 of um just under 100,000 at $99,746. Um and like I said that equates to 7.75%. So then the next um on page two you'll see I've got just a summary of the
uh 2024 budget 2025 and then 2026 just to see as a comparison. And then underneath that you'll see proposed general fund expenditures and then our proposed general fund revenues. And there's um a difference between our expenditures and our revenues and that's
because of the planned um deficit spending using your capital outlay reserves. And then when you look at the budget pages, I did highlight the um the amounts for capital outlay that total
that plan deficit spending. So we've got coming out of streets, fire department, and uh parks. And so but for that portion, the the budget would be balanced. And we're just spending money that we've already set aside for that
purpose. Um, let's see. And we already covered this at the last meeting, but you know, we kind of talked about some of the big factors with our general fund budget. Obviously, LGA property taxes um account
for almost 80% of the general fund revenues. Um some of the things that we really can't control, we've got personnel costs, health insurance. Um you know, the cost of supplies is increasing as in every sector, not just government. Um
and so that's where we're seeing these, you know, increases that we just have to factor into our budget. We also have the new state administered paid family med family and medical leave program. I just wanted to point something out. The last meeting I had stated that uh we
qualified as a small employer, but after attending a presentation on um paid family and medical leave, it turns out that we actually do not qualify for the small employer because we have the fire department on our payroll. So, not a big difference, but you know, we're we're at
a um a different rate for that and that's been factored into the budget. Um, another thing that changed from the last meeting um added a recommendation from the auditors to um include funding for additional um
accounting services uh to help ensure a smooth audit and clean audit opinion. And as I mentioned earlier, we'll be working on the enterprise funds between now and the final budget being approved. Um let's see. And then with that, if you'll turn
over like to page five, this shows, it's a nice um calculation that county provides cities with. It shows you your net tax capacity and then you plug in what your proposed levy is and it shows you kind of what that
equates to and then it gives you a hypothetical like if you had a $300,000 house and you apply this tax rate, this is approximately how much the city tax portion would be. Um and then on the next page on page 6 through
um 12 that's just this is just it's very small because it's it's a general fund revenues and expenditures but I just made some notes since the last meeting. Um I can maybe just kind of walk through those real quick. So on page six I just highlighted um a change was made to the
uh percentage for the city since we're no longer considered a small employer for paid family medical leave. So, I put in 08 88%, excuse me, 088% of our total payroll. And then on page seven under professional
services, I added some additional funding um to outsource like bank wreck and um other accounting services. Page eight, I just highlighted the capital outlay that we'll be spending down money that's already been set
aside. Page nine, if we go to the fire department budget, I did move 5,000 from their clothing allowance request. They have requested 10,000 and I did email them, ask for more clarification on why they need 10,000. And then I also just
shared that we're really struggling to keep the tax levy low. Um, and that I just needed to move 5,000 of that to set aside into their facilities. We just can't do it all. So, I left 5,000 in for uniforms. and then um move 5,000 to set
aside uh for facilities. And then the pink highlighted area that 685,617 that's just showing what they're planning to spend uh on the new truck this year. Page 10, we have a pink highlight area. That's for the parks,
what we're planning to spend. At the bottom, there's where you'll find that general fund uh total expenditure. And then on page 11, we'll see the revenue side. And I highlighted the property tax portion
on the top. And then page 12, you'll just see at the bottom where our revenues at 2,546,574. So, lots of numbers, but it kind of just I wanted to try to pull out and highlight how how it all comes together.
And then on the page 13, it's just a copy of our internal capital outlay tracking and it shows like general government. This is where we're going to be pulling out money for the roof repairs um street. This is what
the street department uses for equipment uh purchases. We've got um city hall kind of falls in the same category as general government. I'm not sure why we have two. Uh we do still have money for uh police that was left over. So that's
something um not sure how we'll use that in the future. I guess right now I think we'll probably just leave it because you never know um what the future holds, but there's 141 with that. And then the fire department facilities, that's what we talked about last time. They've got,
excuse me, about 35,000 sitting there right now available. So, like if they need to do parking lot or roof repairs, they've got some money. And then in the park board, you see got 60,000 and we've got some trails and sidewalks
money. So, I think that's a pretty healthy balance there, which is needed. And then an item that we definitely need to really start beefing up is our civil defense. That's for our tornado sirens. So, those are really expensive. And I mean, this this isn't, you know, hardly anything.
We really need to start we we can't do it this year. I tried to add more, but it it would just impact the tax love too much. But moving forward, every year we're going to have to start being more aggressive with setting aside money to replace two of our sirens. And then eventually something else we
talked about the last meeting too was getting more of like an internal listing of, okay, city hall, we got chairs replaced, get pricing on that. Um, you know, just different things that are going to have to be done. And um so we'll do that for the different buildings and have kind of our internal
so we'll still have the same line items per se for like general government city hall street but then within those we'll have our own internal kind of like this is what we need to start budgeting each year and this is the year we think we're going to get this done. So so with that that's what I have for
now. Um I know you guys want to try to keep it as low as possible. Uh, but I just want to stress I really, you know, I I just don't think there's a lot of areas to cut and um, you know, it's it's it's it's tough because we have
um facility needs, we have equipment needs. Um, you know, next year when we take on the street reconstruction project, we're going to have debt service with that too coming up. So, that'll impact the tax levy. So, good thing is we don't have that
this year hitting us yet. But, so any questions, let me know. That's kind of I know I threw a lot at you, but um right now you're just looking at the general fund, which is all we need to approve for tonight's purposes. Certify that to Blue Earth County. Um, and you can go
higher if you want or, you know, if you have an area where you think we can cut, we we could try that, but it's once you set it, you can't go any any higher than that. So with that, any questions? Any questions from the council?
I I don't mind kind of certifying it where it is and then continue to work to see what we can do to to reduce it. Um but I you know with the $5,000 more that we have to spend because of the the new tax
um plus some other things you know health insurance went up a little bit more again those kind of things. So there's some kind of inflation impacts there's some new unfunded mandate impact. Um, so there are kind of some other impacts there that we can take a
look at, but um, you know what what's uh what's the mood of the council? What was it? Last meeting someone said that we're kind of in the middle of like surrounding communities like somewhere much higher, some maybe a little bit lower, but
and it's that's always a tough one because um, and I'll give you an example. So next year when we have um we're setting the 2027 budget, we're going to have debt service with our street reconstruction project. And so that can really skew your levy and um so
when so sometimes I just caution councils and um other cities when they do their survey of you know what's your city's levy, it's not always comparing apples to apples. Just you know keeping that in mind. But I know that there's a lot of pressure because everybody's
expenses, you know, just living expenses are in increasing. It's really hard. So I I know it and it's hard too when people um you know ask why are levies increasing, but really it's it's the cost of doing business. It's just
keeping up with labor costs, um facility cost, supply cost. Um and also to some degree we're just playing catchup too on a lot of things. So it's kind of like stuff that maybe could have been
um captured over the years a little bit and incrementally maybe wasn't done and now we're kind of just trying to bite off a lot to get get things caught up. it. Um, you know, one thing we did talk about too before um I did talk to the mayor about this, we, you know, the city
does have a healthy fund balance and we certainly want to make sure we maintain a healthy fund balance, but if for some reason the council said we just don't feel comfortable with this 7.75%, we want to see it at 5%, we could look at maybe using some reserves on a onetime basis to to bring it down.
I just wish we had more revenue sources. That's our big thing is we just don't have have much for revenue and that's why we got to keep after LGA money for roadways, you know, things like that because that
that's huge to cities. Whenever you hear about the LGA being cut, that is a big deal for us with it making such a big portion of our budget. And the problem is too when they make cuts up higher, it always trickles down to us here at the local level. And so
other people might be a other levels of government might government might be able to make some cuts in their budget, but you know, it's going to come back and we're going to have to make up for it somewhere. Any questions? Questions. I had I prior to this
meeting. Okay. And the rest of the council. Maybe something else I can say too. think that while we do see our taxes increase, we can turn around and do continue doing a really good job. I feel
like our employees are doing a good job delivering good service to our um you know our community members, making sure that when we're you know taking care of our parks, plowing streets that we just always are customer serviceminded and just really um you know do our end keep
up our end of the bargain and provide good service and and hopefully our residents will um you know appreciate the services that they are getting and make it more palpable. I think yeah I think the biggest thing is not the final levy. So it's it's
something we will would not go above that anyway because that's really stretching us for right now. So having it approved by the September deadline I feel comfortable proving where we're at and then working on getting it down um by the December. Is it December that we
have to do the final? Yep. December 20th. kind of see, you know, looking through the budget several times. There's not there's not any thing to, you know, there's not a big leap from something from last year.
There's some increases. Um, you know, if we could take like that $5,000 out from the unpaid or the Minnesota paid family, now we're down to 7.1% instead of the 75%. So, you know, there are some things that
push back on us that, you know, things like that. Um, well, and one thing you can you can also share if uh we get questions about like staffing. We did not fill the community development coordinator position. So, we've cut that back. We've saved some
money to be able to contract out to do um you know, maybe possibly comprehensive plan, which we desperately need to do. But um so you know staffing we're trying to work with in reason and and have people wear multiple hats and so I don't think or I mean very slim
but if there's not any questions I would look for motion to certify the seven what was it 7.75 7.75 five uh for the preliminary
levy or I'll make a motion to approve the 7.75 for our preliminary tax levy. All right. So, we have a first. Do we have a second? I'll second.
Got a first and second. More discussion. All right. All in favor? We need opposed. All right. We didn't need a roll call on that, did we? No. Perfect. No, now I think the work begins, right? So, we got to see what we
can do to to kind of squish that. Um, move some things around. You know, Jennifer and I did talk about taking one little bit of dip to kind of keep that out. But, you know, we got to take a look at reserves and where we are. going to take a look and see what the new the
road construction next year will do to levy. You know, maybe not take it this year, but take it next year because that's going to be that debt service is going to jump considerably um for next year. Um
I'm not sure with debt service where we are with, you know, the bonds that are coming due and paying off. And I will get you guys a schedule of that. I um should have put that in the packet and I did not. So that it's just something I think would be interesting to see, you know, are are we
close to having some roll off or are we not? Um things like that. Um yeah, the capital capital is the capital, right? So um unfortunately, what is it? The best time to plant a tree was 10 years ago. The next best is
today kind of thing. So I think we are where we're at. So, um, any other business that we need to attend to before we call for adjournment?
All right. Look for a motion to adjourn. I'll make that motion. Right. Second. I'll second. All right. Well, all right. We are ajourned. Thanks for your time, everybody.