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Record of Proceedings

2027 Budget Retreat Summary - September 15, 2026

City Council — Tuesday, September 15, 2026
BodyDuluth, Minnesota
SessionCity Council
DateTuesday, September 15, 2026
StatusFILED
Video Record
0:00 / 5:41:44

Original source
Transcript — VerbatimClick a timed line to jump · ⧉ to share it
0:00

All right, good morning, everyone.

0:01

Good morning, counselors.

0:02

We will start our 2027 budget retreat.

0:06

Just a couple opening remarks before I turn it over to Administrator Colhane.

0:10

And that is we'll start at 9.

0:11

We're gonna probably get out of here around 3 o'clock.

0:14

We will not have structured breaks, so please feel free to get up if you need to use the facilities.

0:19

They're right outside this door.

0:22

Coffee is out here.

0:23

We will have an 11 55 or a new inbox lunch.

0:27

It'll be a working lunch.

0:28

And we will do we will hold our questions until after the each presentation.

0:34

And so what we'll do is we're gonna do freeform.

0:36

So go ahead.

0:36

If there's a moment where you can ask a question, go ahead and do it.

0:39

Um but be cognizant of you know asking one question and letting someone else go.

0:44

Uh and we'll just we'll just do it like that.

0:46

We will raise hands, we won't do anything.

0:48

Let's just freeform this real casual.

0:50

And with that, I'll turn it over to Administrator Colhane.

0:52

Good morning.

0:53

Thank you, Chair Brandor.

0:55

Um, I just want to take a moment and thank all of you for taking time out of your busy schedules to be here today.

1:00

I know this is a big ass.

1:02

It's a long day.

1:03

Um, but it's important work.

1:06

So thank you for that.

1:07

As we noted last night, um, we'll spend the day walking through the proposed 2027 budget department by department.

1:13

Um today's our deeper dive into how the budget was balanced, the choices that brought us to the recommended tax levy, and the work that shaped this proposal.

1:23

As we began, I want to pause and acknowledge that today is September 11.

1:28

Uh, it's a day of remembrance across our nation.

1:31

It's a moment that reminds us of service, resilience, and collective responsibility.

1:37

Values that also guide the work that we do each and every day within the city organization.

1:42

Um, while today focuses on the 2027 budget, I also want us to keep our eyes forward.

1:48

Um, as we talked last night, we're already facing a projected deficit in 2028, and that reality will require ongoing discipline and innovation.

1:57

Throughout 2027, we'll continue refining how we do business, modernizing our processes, leveraging technology to deliver services more easily, more quickly, and more cost effectively, ensuring Duluth becomes an even bit easier place to do business and get it all that.

2:15

I appreciate your leadership, your partnership, and your willingness to engage deeply in this work.

2:21

Um, I'm looking forward to a thoughtful and productive retreat together.

2:25

One final reminder as questions arise after we leave, because they will, um, just please remember to send all inquiries.

2:32

Um, they should be directed to me and to the appropriate department director, not directly to staff below the department head level.

2:40

With that, I'll turn it over to Director Silliness and budget manager Harold.

2:46

Good morning, everyone.

2:47

I just wanted to very briefly um cover look at the agenda.

2:51

Everyone is every department is gonna have between 20 to 45 minutes, depending on the size of the department and the budget.

2:58

It is going to be tight today.

3:01

Um, we're gonna have time at the end of each presentation for questions.

3:06

And um lunch will be at 11 55.

3:10

We have 30 minutes for that, and we will start promptly at 12 25 after that lunch half hour.

3:17

So I am gonna turn it over to Missy, who has done a fantastic job of putting together the packet that is in front of you.

3:23

And I think it's 171 slides.

3:26

So 171 slides of lots of really good data that uh Missy collaborated with all of the the departments and made sure that everything is accurate, and so without further ado, we'll we'll begin.

3:42

All right.

3:44

So we're gonna start off kind of where we ended yesterday, just talking through how we solved the 2027 deficit, and then as we go into all the departments, we'll get all the details, and then at the end we'll look at the slide again, and if we have any questions along the way, um we'll answer those for you.

3:59

So, as you know, the deficit is 5.5 million dollars.

4:03

Um, the property tax increase that is currently proposed is about 1.6 million.

4:09

The one-time transfer of the broadband funds is about 1.8 million.

4:14

Um, the the current estimated increase in Minnesota power franchise fee is just under a million dollars with a plan to dedicate about a quarter of a million of that to some sustainability projects.

4:27

We are anticipating vacancy savings in 2027 of about 1.2 million dollars.

4:34

This is a little bit less than we've seen in in the last several years.

4:37

Um, however, just to kind of put that into perspective.

Discussion Breakdown — Share of Meeting
Public Safety████████████████████20%
Budget██████████████14%
Public Works█████████████13%
Fiscal Sustainability███████7%
Technology and Innovation███████7%
Public Engagement█████5%
Workforce Development████4%
Parks and Recreation████4%
Economic Development████4%
Summary of Proceedings

2027 Budget Retreat Summary - September 15, 2026

Note: The meeting agenda and minutes indicate the event occurred on September 11, 2026, but the user instruction stipulates the date as September 15, 2026. This summary follows the user's directive, acknowledging the discrepancy.

The City of Duluth conducted its annual budget retreat on September 15, 2026, to review the proposed 2027 budget. The day-long session featured presentations from all major departments, highlighting a projected total deficit of $5,517,725. The retreat focused on the strategies to balance the budget, including a recommended property tax increase, use of one-time funds, and departmental efficiencies. Participants discussed the structural deficit challenges facing the city and the need for long-term fiscal planning.

Budget Overview and Deficit Solution

  • Total Deficit: $5,517,725.
  • Proposed Solutions:
    • Property Tax Increase (3.61%): $1,641,000
    • Broadband Funds (one-time): $1,826,800
    • Proposed MN Power Franchise Fee Increase (commercial only): $988,100 (with $250,000 dedicated to sustainability projects)
    • Anticipated Employee Vacancy Savings: $1,200,000
    • Shift of seasonal park maintenance expenses from Parks Fund to General Fund: $419,700
    • Contingency Fund Expense Reductions/Miscellaneous Adjustments: -$531,525
    • Total Budget Adjustments: $5,517,725
  • Discussion: The $1.2 million vacancy savings were questioned as the riskiest element, based on historical averages. Administration confirmed contingency funds of about $1 million are available if savings fall short.

Police Department

  • Proposed Budget: $32,414,600 (General Fund), an increase of 6.4%.
  • Key Points:
    • 2026 accomplishments included technology advances (drone as first responder), ICAC lab partnership, largest onboarding in years (23 recruits, 70% from FDLTCC, 22% women).
    • Sworn filled positions: 143; goal to achieve authorized strength and have ability to “hire ahead”.
    • Challenges include firearm range closure (ERTC), criminal justice system changes, and quality-of-life issues.
    • Parking enterprise fund revenue down 5.4% due to MDR bond payoff; reserve funds used for maintenance.
  • Discussion: Questions about overtime savings vs. vacancies, diversity percentages (1% Hispanic, 1% Native American, 4% African American, 2% Asian), and animal control partnership opportunities.

Workforce & Employee Development Department

  • Proposed Budget: $1,978,900 (General Fund) + $3,435,981 (Special Revenue Fund), total increase 12.9% in GF.
  • Key Points:
    • Merger of HR and Workforce Development completed; 1,741 applications reviewed for 150 positions; 241 employees onboarded in 2026.
    • Workforce Development serving 109 employers and 441 jobseekers through job fairs.
    • 2027 goals include class & compensation study, electronic employee files, and securing competitive grants for Blatnik Bridge workforce strategy.
  • Discussion: Clarified that the 16.1% salary increase partly due to transfer of half-time director position; participant wages separated out ($288,652).

Property, Parks & Libraries Department

  • Proposed Budget: $18,008,800 (General Fund), increase of 8.6%.
  • Key Points:
    • Fleet preventative maintenance improved from 35% to 66% of work orders.
    • Library children’s area refresh underway; Lakewalk reconstruction commenced.
    • Park maintenance expenses shifted from Parks Fund to General Fund to free up $400k for park capital improvements.
    • Fleet internal service fund revenue up 10% due to fuel and parts inflation/tariff impacts.
  • Discussion: Clarification on the park maintenance transfer; community investment in parks; library governance and funding challenges.

Public Works & Utilities Department

  • Proposed Budget: $12,520,100 (General Fund), increase of 3.9%.
  • Key Points:
    • Department has 267 positions, no change; enterprise funds (water, gas, sewer, stormwater) show strong resilience.
    • General Fund revenue up 5% due to increased stormwater transfer for street sweeping.
    • Lead service line replacement mandate (1,000 replacements in 2026) with significant future funding uncertainty.
  • Discussion: Questions about enterprise fund vs. special revenue vs. general fund; communication strategies for infrastructure projects; commercial growth supporting infrastructure.

Legislative & Executive Department

  • Mayor & City Administrator Budget: $1,465,500 (increase 5.3%); City Council Budget: $263,100 (increase 21.3%); Attorney’s Office Budget: $4,049,200 (increase 12.5%).
  • Key Points:
    • Accomplishments include UDC overhaul, developer roundtables, launch of city mobile app.
    • City council budget increase partly due to budgeted police overtime for meetings ($20,000 in professional services).
    • Attorney’s office litigated numerous cases; criminal division attended over 8,500 court appearances in 2026.
    • Challenges: increasing complexity of litigation and AI-generated filings; unfunded mandates.
  • Discussion: Need for police overtime at council meetings; concerns about downtown safety; regional collaboration opportunities.

Technology & Information Services Department

  • Proposed Budget: $6,346,000 (increase 8.2%).
  • Key Points:
    • New department combining IT and Clerk’s office; implemented e-poll pads, online licensing, city app.
    • IT staffing increased by 1 FTE; software license costs rising significantly (enterprise agreements).
    • Clerk’s office focusing on special event permit streamlining and aligning license renewal periods.
  • Discussion: Open source software opportunities considered; understaffing challenges; digital accessibility improvements.

Planning & Economic Development Department

  • Proposed Budget: $4,975,600 (increase 9.5%).
  • Key Points:
    • UDC amendments and short-term rental reform accomplished; downtown activation events.
    • 2027 focus on Lot D, Spirit Valley, First Street improvements, and development process improvements.
    • Challenges: housing funding gaps, blight remediation (no budget for demolition), scarce property for development.
  • Discussion: Blight funding from VBR or other sources; DITA role and funding ($450k transfer to city).

Fire Department

  • Proposed Budget: $25,390,500 (increase 2.9%).
  • Key Points:
    • Successful overtime reduction strategy (added 3 FTEs); apparatus chassis replacement program.
    • Life safety division reduced housing inspection backlog from 3 years to 6-8 months.
    • Critical challenge: closure of ERTC fire training facility by 2028; need for regional training hub.
    • Revenue up 25.5% due to three-year cycle of multiple dwelling license renewals and fee adjustments.
  • Discussion: Overtime budget (budgeted $861k); PFAS-free gear transition; short-term rental inspection funding concerns.

Finance Department

  • Proposed Budget: $3,751,200 (General Fund expenses; total revenue captured $100,983,600).
  • Key Points:
    • 47th consecutive GFOA award for financial reporting; 43rd for budget presentation; AA bond rating.
    • Revenue sources: property taxes, sales tax, LGA, franchise fees, cost allocations, broadband fund transfer.
    • 2027 property tax increase $1.64 million; broadband fund transfer of $1.83 million is one-time, creating larger deficit in 2028.
  • Discussion: Concerns about structural deficit; broadband fund history; call for long-term fiscal strategy and commercial tax base growth.

Key Outcomes

  • The recommended property tax increase is 3.61% ($1.64 million).
  • Use of one-time broadband funds ($1.83 million) is proposed, acknowledged to deepen 2028 deficit.
  • MN Power franchise fee increase for commercial estimated at $988,100; council discussed potential residential impact.
  • Vacancy savings of $1.2 million are anticipated, with contingency funds available.
  • Seasonal park maintenance expenses ($419,700) shifted from Parks Fund to General Fund to free up park capital.
  • No final votes taken; the retreat served as a detailed review. Formal budget adoption will occur later.
  • Administration committed to presenting a long-term fiscal roadmap in 2027, emphasizing need for structural reforms.
  • The council expressed strong concerns about sustainability and the need for bold solutions to address recurring deficits.

Meeting Transcript

All right, good morning, everyone. Good morning, counselors. We will start our 2027 budget retreat. Just a couple opening remarks before I turn it over to Administrator Colhane. And that is we'll start at 9. We're gonna probably get out of here around 3 o'clock. We will not have structured breaks, so please feel free to get up if you need to use the facilities. They're right outside this door. Coffee is out here. We will have an 11 55 or a new inbox lunch. It'll be a working lunch. And we will do we will hold our questions until after the each presentation. And so what we'll do is we're gonna do freeform. So go ahead. If there's a moment where you can ask a question, go ahead and do it. Um but be cognizant of you know asking one question and letting someone else go. Uh and we'll just we'll just do it like that. We will raise hands, we won't do anything. Let's just freeform this real casual. And with that, I'll turn it over to Administrator Colhane. Good morning. Thank you, Chair Brandor. Um, I just want to take a moment and thank all of you for taking time out of your busy schedules to be here today. I know this is a big ass. It's a long day. Um, but it's important work. So thank you for that. As we noted last night, um, we'll spend the day walking through the proposed 2027 budget department by department. Um today's our deeper dive into how the budget was balanced, the choices that brought us to the recommended tax levy, and the work that shaped this proposal. As we began, I want to pause and acknowledge that today is September 11. Uh, it's a day of remembrance across our nation. It's a moment that reminds us of service, resilience, and collective responsibility. Values that also guide the work that we do each and every day within the city organization. Um, while today focuses on the 2027 budget, I also want us to keep our eyes forward. Um, as we talked last night, we're already facing a projected deficit in 2028, and that reality will require ongoing discipline and innovation. Throughout 2027, we'll continue refining how we do business, modernizing our processes, leveraging technology to deliver services more easily, more quickly, and more cost effectively, ensuring Duluth becomes an even bit easier place to do business and get it all that. I appreciate your leadership, your partnership, and your willingness to engage deeply in this work. Um, I'm looking forward to a thoughtful and productive retreat together. One final reminder as questions arise after we leave, because they will, um, just please remember to send all inquiries. Um, they should be directed to me and to the appropriate department director, not directly to staff below the department head level. With that, I'll turn it over to Director Silliness and budget manager Harold. Good morning, everyone. I just wanted to very briefly um cover look at the agenda. Everyone is every department is gonna have between 20 to 45 minutes, depending on the size of the department and the budget. It is going to be tight today. Um, we're gonna have time at the end of each presentation for questions. And um lunch will be at 11 55. We have 30 minutes for that, and we will start promptly at 12 25 after that lunch half hour. So I am gonna turn it over to Missy, who has done a fantastic job of putting together the packet that is in front of you. And I think it's 171 slides.

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