Saint Paul Budget Committee Reviews FY2027 Proposed Budget and Q2 Actuals - August 19, 2026
Saint Paul Budget Committee Reviews FY2027 Proposed Budget and Q2 Actuals - August 19, 2026
The Budget Committee of the Saint Paul City Council met on August 19, 2026, to receive an overview of the Mayor's proposed FY2027 budget and a review of the city's Q2 2026 budget-to-actuals. The meeting featured presentations from Budget Manager Madeline Mitchell and Finance Director Joe Harney. The proposed operating budget totals approximately $888 million with a 6.8% property tax levy increase, addressing a $26 million structural gap through a combination of levy increases, spending reductions, and other revenue adjustments.
Discussion Items
- FY2027 Budget Overview: Budget Manager Madeline Mitchell presented the Mayor's proposed budget, which closes a $26 million general fund gap. Key components include a 6.8% property tax levy increase (raising $14.3 million), $2.7 million in net department spending reductions, and $12.9 million in other revenue growth. The budget funds nearly 3,200 FTEs, a net decrease of 10.59 FTEs in the general fund. Major reductions include: elimination of the Fire Department's CARES division ($720,000, achieved through attrition), reduction of 7 police sergeant positions ($1.4 million) and 4 commander positions ($971,000), closure of the Dayton's Bluff Library ($270,000 savings), and cuts to recreation center hours and programming. New investments include $2 million for police academies, $300,000 for EMS academies, $1.1 million for a deferred maintenance fund, and ongoing general fund support for Right Track and Sprockets programs. The budget also proposes revenue increases such as higher fire-related fees ($4.46 million) and franchise fee adjustments.
- Budget-to-Actuals (Q2 2026): Finance Director Joe Harney reported that general fund expenditures and revenues are tracking similarly to Q2 2025, with 50% of budget expended. Key highlights include challenges in revenue collection for DSI (due to cyber incident and Poly system transition) and public works (consistently under-collecting). The city has issued judgment bonds for a lawsuit settlement but has not yet processed the budget amendment. The Como Zoo fund remains in deficit, and rating agencies view it as a pressure on the general fund balance.
- Council Member Positions and Concerns:
- Council Vice President Yang expressed strong opposition to the library branch closure (Dayton's Bluff), parks cuts in low-income areas, and elimination of the CARES team without a phase-out plan. She supported reducing leadership positions but questioned the lack of a budget reduction target for the Council. She also urged decertification of TIF districts to generate additional revenue.
- Councilmember Bowie questioned the effectiveness of the alley pilot program and requested clarity on revenue generation efforts, including toll fees. She noted the need for a realistic budget for lawsuit settlements after years of overspending and suggested exploring municipal insurance.
- Councilmember Kim raised questions about vehicle repair and fuel costs for police and fire, the rationale for cities not meeting 4% reduction targets across departments, and the need to measure overtime reduction success. She also commented on Como Zoo fees and noted that foreign currency donations cannot be easily converted.
Key Outcomes
- The Committee will compile a list of follow-up questions for the administration, including: details on the library fund balance and its contribution to the city's 15% general fund balance policy, specifics on recreation center hour reductions, the police overtime and vehicle budgets, the recruitment success rate for police academies, and the feasibility of using fund balance to avoid library or parks cuts.
- Department presentations will continue in subsequent meetings, with police and fire scheduled for later weeks. The Committee will also receive updated data on projected revenues from TIF district decertifications and possible new revenue ideas such as toll fees or Como Zoo donations.
- No formal votes were taken; the meeting was informational and procedural to begin the budget review process.
Meeting Transcript
Roll call, please. Chair Johnson here. My chair Young. Councilmember Bowie. Here. Councilmember Cullman. Councilmember Kim. Here. Council Member Joe. Council President Maker. Six present, one excuse being Council President Acre. All right, thank you. We are heading into budget season. This is to kick off the first of many different department updates. We'll be starting with the Office of Financial Services and also you as you may know in 2026 budget cycle. We asked for quarterly budget to actuals. So we will also be hearing from OFS regarding quarter two budget to actuals as well today. So I will hand it over to budget manager Madeline Mitchell. Welcome, Ms. Mitchell. Thank you. Good morning, Chair Johnson, Council members. My name is Madeline Mitchell. I'm the city's budget manager, and today I'm going to walk you through the mayor's 2027 proposed budget. We will start with the overall budget picture, including the 26 million dollar general fund gap that you've all heard about, and how the proposed budget closes that gap. Then I'll walk through spending and revenue changes and then go department by department through the major general fund changes, finish with some uh special fund investments, and then what that proposal, what the entire proposal means for the typical St. Paul household. Um there are a lot of individual decisions in this budget, and I won't be able to cover all of them, but I will do my best to focus on the things that are most important for overall understanding of the budget and the choices that are embedded in it. Um as we go through this, please um of course feel free to stop me with questions. My team and I are here to help you understand uh both the financial implications of this proposal and as we move through the process, the implications of any changes that you may want to consider. Before we start, I'd like to take a moment to recognize and thank the members of the budget team who have worked so hard in preparing this budget. Mati Guerra, Brian George, Shannon Forney, Michelle Botco Woods, Emma Schusterm Abis, and our finance director, Joe Harney. Um and I would also like to thank our partners and colleagues in departments. We have a lot of department staff here as well. Um so thank you to everyone who worked so hard on this budget. At the highest level, the 2027 proposed operating budget is approximately $888 million. This includes a 6.8% property tax levy increase. It funds nearly 3,200 FTEs, and its development was guided by four principles laid out by the mayor's office. Uh promoting long-term fiscal sustainability, strengthening community safety, supporting a thriving business environment, and responding effectively to residents' needs. We'll go through some summary slides in a moment here, but I first want to talk about the 2027 budget environment, as you have all heard before. Every year we start the budget with budget process with a gap, and that's because the cost of doing business, of doing the same thing that we did last year under this year's conditions, gets more expensive every year with increasing wages, health insurance rates, fuel costs, etc. Our revenues don't automatically grow to keep pace. So for 2027, our starting budget gap was 26 million, made up of inflationary salary and fringe growth, reabsorbing costs from the ARP phase-off, funding the debt levy, and then covering other increases like utility adjustments and reflecting um costs that were added mid-2026 into the 2027 base budget. Uh and that's all before adding any new spending. I'll note here that 74% of this budget gap is driven by employee expenses, which is pretty comparable to the amount of general fund spending on personnel. Um and for reference, a one percent increase in the property tax levy yields about 2.2 million in revenue for the city. So if we were to close this entire gap with only property tax levies, this would mean a nearly 12% levy increase. When we talk about balancing the budget or closing the budget gap, we have three level levers to pull to get that gap to zero. We can either increase the property tax levy, reduce spending, or find new non-property tax revenue. Uh we have control over some of the non-property tax revenue uh in that we can set rates and fees, but much of it is is out of our control.
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