New Ulm staff present preliminary 9.79% levy projection amid rising insurance, paid-leave and park costs

New Ulm finance staff presented a preliminary 9.79% levy projection for the 2026 budget during a council work session on Aug. 19, saying the figure reflects reductions from an initial 17.9% levy projection and a series of accounting shifts.

Finance Director Jorgensen said staff reduced the levy projection by moving several costs out of the levy, including a street-department project moved into a non-levy fund, a civic-center roof project moved to a different capital fund, and eliminating an international trip that had been included in an earlier draft. "We started at 17.9% levy increase. We've looked through it. We've worked through it," Jorgensen said, and reported the levy was now down to 9.79%.

The finance director and other staff identified several budget drivers that constrain further reductions. Health insurance costs were originally estimated to rise 25% and are currently modeled at a 22.7% increase; staff said that cut about $47,000 from the levy projection and that a lower estimate near 19% remains a possibility but is not yet confirmed. City staff also included the employer share of Minnesota Paid Leave in the budget; staff estimated the city's half of the employer obligation at about $45,000 annually based on a $10,000,000 payroll assumption.

Park and facilities needs were cited as another major pressure. Staff said they had initially increased the city-facility contribution to about $750,000 for building maintenance but reduced that to $400,000 for the preliminary budget (noting the city typically budgets about $250,000–$300,000 per year). Council members and staff discussed upcoming large park and recreation projects that will need funding in the next three to five years; staff said bonding and other financing options are being explored with PFM, the city's financial advisor.

Staff listed several smaller, one-time items included in the preliminary budget that could be shifted to fund balance to reduce the levy further. Those included Christmas decorations, a sunshade replacement at Mueller Park grandstands, and converting one racquetball court at the recreation center into fitness space; the three smaller projects together total about $43,000 and would lower the levy roughly another half percentage point if funded from fund balance.

On tree removal, staff described an ash-tree removal line item of about $13,000 for city-owned right-of-way removals and said the city will pursue a Minnesota Department of Natural Resources (DNR) grant program that opened the day of the meeting. Staff said previous DNR grants had funded removals and that the new competitive grant round (noted by staff as a $4,000,000 statewide program) will be evaluated and, if sought, brought back to the council for authorization.

Council members asked for clarifications about specific line items. Jorgensen said a civic-center roof cost of about $68,000 had been moved out of the levy and that the remaining amphitheater repayment balance was roughly $75,000. On naming-rights revenue for parks, staff said the budget includes a modest, initial revenue estimate that is expected to increase after 2026 when signage and program setup are complete.

Council members and staff discussed the limits of local revenue and the city’s reliance on state Local Government Aid (LGA). Staff noted LGA accounts for roughly 25% of the city’s revenue and flagged state budget pressure on LGA as a continuing risk.

No formal motions or votes were recorded during the work session; the figures discussed were described as preliminary. Staff said the preliminary levy cannot be raised before the end of the year but could be reduced. Staff also said they will continue to refine estimates over the next month or so and return to council with more detailed budget reports and any grant-authority requests.

The work session concluded with council members thanking staff for the budget work and with no further items on the agenda.