Lake Elmo City Council — Transcript
Thursday, August 14, 2025
2026 Budget and Tax Levy Proposal
2026-2035 Capital Improvement Plan (CIP) Review
Votes (2)
2026 Budget Information: General Fund, Utility Funds, and Tax Levy
Finance Director Clarissa Hadler presented the proposed 2026 budget, detailing a 21% increase in the total levy ($2 million) and a 4.88 percentage point rise in the tax rate. This was attributed to new staff, COLA adjustments, and increased capital levies, reflecting a strategy to fund future infrastructure needs after years of under-investment. Council members, particularly Jasich and Hearn, expressed significant concern about the 21% increase, advocating for a reduction to a 'manageable' level, ideally around a 10% increase. The discussion also touched upon revenue streams, the impact of depreciation on utility funds, and the timeline for budget adoption.
2026-2035 Capital Improvement Plan (CIP) Discussion
The council reviewed the CIP, focusing on the scale and pace of capital investments, particularly road projects. Staff, including Manning, emphasized the CIP's nature as a flexible planning tool, especially beyond the initial 1-3 years, and that projects are prioritized based on current condition. Council members discussed the trade-offs between aggressive infrastructure investment (to avoid higher future costs and debt) and a more gradual approach to reduce the immediate tax burden. They explored possibilities of deferring less critical projects, especially those in later years or those potentially funded by developers (e.g., Fifth Street, Manning/Hudson stop light), and questioned the scope of park-related capital expenses.
Notable Quotes (10)
Uh the levy certified in September cannot be increased um but it can be decreased uh before the final certification in December.
Our total levy for proposed levy for 2026 is 12,25,453. That is over a $2 million increase from last year and a 21% increase.
I just don't see that we can increase our tax le 20%. I think that would be we would get such beat beating we'd have to hide in our basements for a month. I think we have to find a way to get that uh a better number.
I I personally I'd like to see this come down to the total levy increase to 10% I think is the max that we should aim for.
This process should have been done 20 years ago when the city started to develop, right? And so, you know, we're we're significantly behind where we should be today. And the more we put it off, the worse future Lake Elmo,
I think working backwards might be a better um way of going about this of okay if council member Dragoich you know was helping me understand from this standpoint too as far as like I think it's 50% or $5 million a year that we're putting towards roads and again to the conversation we had in the about with the levy where yes, if we could get to that point where instead of having to be doing these large reconstructions, it's more um the maintenance side of it. And I I I want to get there and I think that's really good that we're being proactive about getting there. I think maybe we need to get there slower.
Everything else is a planning tool. So everything beyond 2026 is a planning tool and next year we'll come up with a revised CIP and some of these projects will be off the list and some of the projects or they'll be moved around based on what we're seeing out there.
If development comes in before 2030, the developer will have to pay 100% of that cost. It's it's I put it in there in 2030 because that's when that o area opens up as a planning thing. And if nothing's happened in by 2030, it's likely because developers aren't going to stomach that cost that portion of the road and the city might need to build that road uh to jump start development in that area.
The only thing I would say is the path that we've been on has pushed a six into $60 million outstanding debt and a debt levy each year to property tax. That's 35% of our levy goes just to pay principal interest on bonds. That's just not sustainable.
For an engineering perspective, all need to be reconstructed today. Even though we're not doing them, we're doing them over the next five years, but they all need to be done today.
Ordinances & Resolutions (23)
The proposed financial plan for fiscal year 2026, including general fund, utility funds, and tax levy components.
The levy amount to be adopted in September, which cannot be increased but can be decreased by December.
The final levy certification in December, after which no changes can be made.
A prior meeting where the city's core strategies and objectives were developed.
An annual plan for utilities used to base budget assumptions and forecast rates.
A three-year city planning process requiring contract services.
A project in its second year of implementation, impacting the budget.
A 10-year planning document for capital projects, described as a 'moving target' rather than a rigid plan.
A capital improvement fund for the City Center, with a proposed levy of $120,000.
A capital improvement fund for park facilities, with a proposed levy of $100,000.
A fund created for an interfund loan for the newly purchased ballpark property.
An existing fund to replace city vehicles and equipment with cash.
A fund for annual street maintenance, with a proposed levy of $600,000.
A fund for reconstruction projects, increased to $500,000 for 2026.
Intergovernmental funding, now proposed to be deposited directly into capital project funds.
A state-mandated report detailing permit fees versus costs, used to ensure alignment and avoid lawsuits.
A plan reapproved annually by the council, guiding employee steps and merit increases.
A guiding document containing recommendations for park development and improvements.
A proposed statistically sound survey to gather community input on livability and specific projects like the 77 acres.
A grant component related to the pre-development costs for the 180-acre property.
A $13,000 study for a potential fire sub-station, considered for deferral.
A plan that programs maintenance dollars and guides road reconstruction projects based on pavement ratings.
A major infrastructure project with a city contribution of $2.5 million in 2026, not deferrable.