The Bloomington City Council held a study session on Monday, August 18, 2025, with the sole agenda item being a discussion of the 2026 preliminary tax levy and general fund budget. Kari Carlson, city finance director, presented the budget forecast, reductions achieved, and the path forward for priority-based budgeting. The meeting included a public comment period and council discussion but no formal votes. The council will set the preliminary levy at its September 8, 2025 meeting.
Staff Presentation (Kari Carlson): The initial 2026 tax levy forecast showed an increase of approximately $15.7 million (nearly 18%), driven largely by expiring funding sources: one‑time public safety state aid (6 positions), American Rescue Plan funds (3 fire battalion chiefs), and the first of two FEMA SAFER grants (18 firefighters, expiring Q1 2026). Revenue growth from lodging/admission taxes, permit, and licensing fees is flat.
Several levers reduced the projected increase:
These combined reductions total $7.4 million, lowering the proposed preliminary levy increase to 9.44% (about $8.3 million). The general fund budget shows public safety (police $41M, fire $17M) accounting for nearly half of expenses. The council will set the preliminary levy (the maximum possible) on September 8; the final levy will be adopted December 22 after additional priority‑based budgeting (PBB) reviews and a truth‑in‑taxation hearing on December 8.
Council Questions and Clarification:
Council Discussion: Members thanked staff for reducing the forecast from ~18% to 9.44% and emphasized the importance of public engagement.
Good evening, everyone, and welcome. I will call our Bloomington City Council meeting to order. Tonight is Monday, August 18th, 2025. This is a study meeting of our city council. And we have exactly one item on our agenda this evening. It's item 5.1. It's a discussion of our 2026 preliminary tax levy and general fund budget. And the way we're going to do this, uh, we are going to have a presentation from Kari Carlson on regarding the budget process and where we are from a budget standpoint. We're then going to open it up for a uh a round of public comment on it. Uh it's not officially a public hearing, it's a public comment opportunity. And uh we'll invite anyone who wishes to speak will be able to speak. And then we will have a council discussion on the same. And we'll we're still working on our same nine o'clock deadline with our council meeting tonight, so we've got that to consider as well. So that is the one and only organizational business item that we do have this evening. Any questions on that, Council? Very good. Let's dive right in. Ms. Carlson, good evening and welcome. Good evening, Mayor and Council. For we don't have tonight's presentation. We don't have to move the agenda. Sorry, I'm just trying to advance the slide. One moment. There you go. Okay, for tonight's presentation, I'll start with some background and our initial forecast for 2026. And then from there, I'll walk through the different levers we've identified to lower the projected tax levy. We'll also look at the preliminary general fund budget for 2026 and share an update on our priority-based budgeting process. I'll close that section with the 2026 budget calendar and key milestones ahead. And after the presentation, as you said, we'll open the floor for public comment where each person will have up to three minutes. Then we'll look to the council for discussion and guidance on the preliminary levy. So at the end of last year, as we looked ahead to 2026, our initial tax levy forecast was showing an increase of about 15.7 million, which would be just under 18 percent. And a big factor driving uh this forecast was expiring funding. So there's funding that is ending in 2026, and that includes um some one-time public safety state aid that is funding uh six positions, some American Rescue Plan grant funds that are also coming to an end this year that has been funding three fire battalion chiefs, as well as uh the first of our two safer grants through FEMA that have been funding um enabled us to bring on 18 firefighters for each of those grants, and as we've been talking about, that um grant will be ending the first quarter of 2026. And we do have a can you hear me okay? If we get a little closer to the microphone, we'd appreciate it. Thank you. Okay. Um so the expiring funding sources are as I said, the public safety state aid, the American Rescue Plan uh grant funds, as well as our first of our two safer grant funds. And then as we're looking at the revenue outlook for 2026, as we've talked about before, the lodging and admission tax has come back from the pre-pandemic levels, which is wonderful, but we're not projecting huge growth for 2026. And so that won't be making up the the expiring funds, the grant funds. And then also looking at the forecast for permit revenue and licensing revenue, those also look flat, look flat. So knowing that these challenges are coming, um, right away beginning in January, the core budget team became planning to just start looking at ways to reduce this large projected tax levy. And so that work has continued. We've done regular analysis, collaboration across departments, and it will remain ongoing as we refine this 2026 budget. So the first lever we'd like to talk about is um capital projects and debt planning. So in our original forecast at the end of last year, a couple capital projects would have driven a big increase in debt service for 2026. So since then we've scaled back or pushed out some of those projects, which dropped the impact from $4.2 million in the tax levy down to $1.5 million. And so that means the tax levy increase for debt is now down at $1.7% as opposed to almost 5%. And then also on the slide, I just wanted to emphasize that the projects at the bottom, which are the new community center, the ice garden renovations, and the 9 Mile Creek and Moore Park upgrades, those are funded separately with the half percent local sales tax that was approved by voters.