The Duluth City Council met on September 4, 2025, for an agenda session primarily focused on Mayor Reiner's presentation of the proposed 2026 maximum property tax levy and a multi-pronged strategy to address a projected $7.3 million general fund deficit. The meeting also included discussion of several consent agenda items, including resolutions on the levy, parks, housing, transit, a Pride resolution, public works contracts, public safety grants, and a new transportation commission ordinance.
Good evening. We will begin our evening with a presentation by the mayor on the budget. Welcome, Mayor Reiner. Please go ahead. Thank you, uh, President Tamonic, Counselors, Minister DeStaling, Attorney Lair, members of the public. So, you know, counselors a lot. I think I feel like about half of what I'm going to say uh you already know, but I think it's important for the public to always be tracking along with what we're doing and why we're doing it. So, you know, we of course have two responsibilities to the public uh under state statute. One is to set the maximum property tax levy by the end of September, the other is to adopt our 2026 budget by the end of December. The two, of course, are linked, but they are distinct steps in this process. So what we're here to propose to you today, and I have uh both uh Josh and uh Missy from our finance team who can also help answer any uh questions that you might have is to talk about the recommended maximum property tax levy for 2026. Maybe all right. This is my favorite slide ever, and I use it every chance I can. In fact, I'm gonna use it twice in today's presentation because uh counselors, you know as well as I do that no matter what we do in this chamber, uh folks think that every single property tax dollar collected in the city of Duluth goes to the city of Duluth, and that's just not accurate. So this is based on last year's levy about of a dollar uh paid in property taxes in the city of Duluth, 41% goes to St. Louis County, 27% goes to the city, 26% to the school district, 2% for our dedicated park levy, and then the other 4% is other miscellaneous uh taxing authorities. But again, I already had a back and forth with someone today who was upset about the levy that the county has uh the maximum levy the county adopted. And when I explained that we don't control the county, uh that was not an acceptable uh answer. So be that as it may, we're here to talk about the city's levy. I think it's also helpful for us to discuss what does a 1% levy increase mean um for the different taxing entities. So for us it's actually the smallest. We're about 443,000. ISD 709 is just slightly ahead of us at 449,000. But a 1% levy increase for St. Louis County is worth nearly uh $2 million. We talked a little bit a couple weeks ago about what's coming for us in 2027 and 2026 and 2027 in terms of our projected deficits. So, counselors, I use this slide just to point out to you what is driving our projected de uh deficits, and it's really salaries and wages and benefits. You know, the top line demonstrates that really clearly. The additional medical insurance lines uh kind of flesh that out. Uh and this should be no surprise. We are a people intensive organization. We don't make a thing, we provide services. Uh and as I like to say, there is no city without our city workers. And we are in the same competitive employment market as any other organization is. Um and we add in the fact that we have seven collective bargaining units, and all of those contracts were redone last year or into 2025. Uh most recently you approved the uh IAFF local 101. So when we see salary increases within those contracts that cover 99.95% of city employees, um uh we should not be surprised that we see the uh wage line item increase. And um we also want that. Those are our uh most precious assets. Um it's an investment in our people. But this graph, counselors really shows you again why we have a deficit in 26 and why we have one in 27 and even a small one projected into 28. Because each year as wages go up, um our revenues stay relatively flat. Uh and we'll wrap up by talking to you again about where our revenue sources come from. So a couple weeks ago when you had us here and we talked about uh the city uh budget for 2026, um we said we've got a couple different options that we could pursue. We said we've got a couple different options that we could pursue. You know, if we were only to do the budget by reductions, we would need to find 7.3 million dollars in the city general fund budget. And we said if we were only to do the levy, we would need a 17% levy this coming tax year. And then we would also need a 10.5% levy the following year. So at that time, I argued that neither of those is assist is a sustainable option. The $7.3 million in reductions to the organizations would be a noticeable reduction in services to our residents.