Red Wing City Council Workshop on 2027 Preliminary Operating Budget - August 3, 2026

The Red Wing City Council held a workshop on August 3, 2026, from 5:30 PM to 8:03 PM to review the proposed 2027 Preliminary Operating Budget. The meeting was led by Council Vice President Beth Snyder (Council President Janie Farrar attended virtually). Staff presented a recommended 3.99% increase in the property tax levy and a $3.2 million transfer from the general fund to the ambulance fund. Council members expressed a range of views on the levy and the transfer, with no formal votes taken; staff will provide additional information for a final levy decision on September 14, 2026.

Discussion Items

• Budget Overview and Proposed Levy: Finance & Accounting Manager Tony Schultz and Administrative Business Director Marshall Hallock presented the 2027 proposed budget. The recommended property tax levy increase is 3.99%, which amounts to $1,120,944. They noted that $1.7 million in debt service is dropping off, and about $1.4 million of the increase is due to a higher capital contribution. After normalizing for the $3.2 million ambulance fund transfer and increased capital spending, the core expenditure increase is 4.81%. Staff emphasized that the budget is balanced without using unassigned fund balance for ongoing operations.
• Ambulance Fund Transfer: The proposed budget includes a one-time transfer of $3.2 million from the general fund to the ambulance fund to address cash deficits, underfunded public services, and budget deficits. Council members expressed concerns: Council Member Ron Goggin said the transfer could hide the true cost of ambulance service from the public; Council Member Donald Kliewer asked about the impact on the levy if the transfer was instead used to lower taxes (Hallock stated it could reduce the levy by $2 million). Council President Farrar and Mayor Gary Iocco also raised concerns. Staff argued the transfer does not change total city cash and is recommended by auditors and bond rating agencies. Council Member Kliewer suggested extending the transfer over multiple years, which staff said is possible.
• Preliminary Levy Target: Council members gave initial reactions to the 3.99% proposed levy:
  • Council Member Goggin advocated for 0%, arguing that with $1.7 million in debt service savings, the effective increase is higher.
  • Council Member Kim Beise supported a preliminary levy of 5.99% (or 6%) as a placeholder, noting that Xcel Energy’s valuation uncertainty could affect revenue and a higher preliminary gives flexibility to reduce later.
  • Council Vice President Snyder supported 3.5% (CPI) and stressed the need to consider combined tax burden from the county and school district.
  • Council Member Becky Norton agreed with Beise, supporting 5.99% for the preliminary, but cautioned against cuts without understanding service impacts.
  • Council Member Kliewer favored a preliminary levy around 2–3% to avoid repeating past problems from a 0% levy.
  • Mayor Iocco said he wants a levy below CPI and noted the city has strong reserves (projected 69.25% of policy goal of 60%).
  • Council President Farrar said 3.99% is a good starting point but she would like to see a final levy at 3.5% or lower, possibly using the ambulance fund transfer to reduce taxes.
  • Council Vice President Snyder concluded that she supports a reasonable proposed levy and looks forward to additional information.
• Fire Department Personnel: Council Member Norton requested details on hiring two new firefighter paramedics to reduce overtime. Fire Chief Mike Warner explained that vacancies due to FMLA, injuries, and departures have increased overtime costs. He stated that adding two positions would help reduce overtime, though quantifying savings is difficult. Staff agreed to run an analysis.
• Other Potential Expenditures: Council members discussed:
  • Dog park: Council Member Norton mentioned a volunteer committee, and Mayor Iocco noted the committee plans to fundraise. Staff said the parks master plan and strategic planning processes will guide site selection.
  • Employee retention and compensation: Council President Farrar and Council Vice President Snyder supported exploring longevity pay or performance initiatives to retain institutional knowledge.
  • Health insurance: Council Member Norton advocated for information on moving employees from ICRA to the self-insured plan.
  • Capital projects: Council Member Goggin questioned spending on park improvements and a bike trail connection, urging focus on core infrastructure. Engineering Director Zach Regnier explained the $46,000 request is for a study of trail options.

Key Outcomes

• Direction on Preliminary Levy: No consensus was reached on the exact preliminary levy percentage. Council members will continue discussions at the August 24 regular meeting and will set the preliminary levy on September 14. Staff will provide updated information on property valuation changes (including Xcel Energy), the ambulance fund, fire department costs, employee retention strategies, and the impact of the ambulance fund transfer on the levy.
• Next Steps: Staff will present more details at upcoming workshops, including a benefits study later in August and an ambulance fund workshop on the fourth Monday of September (after the preliminary levy deadline). The council will hold a Truth in Taxation hearing in December before adopting the final budget.
• No Formal Votes: As a workshop, no votes were taken. The council provided feedback for staff to incorporate into final recommendations.