St. Louis Park — On Sept. 15 the St. Louis Park City Council adopted a preliminary 2026 property-tax levy that sets the maximum city portion of property taxes for next year and approved related HRA and Economic Development Authority (EDA) levies.

Amelia Kruger, finance director, told the council the package before them included a proposed overall levy increase of about 8.02% and specific levies for the Housing and Redevelopment Authority and the Economic Development Authority. “Does council support the HRA levy of $1,194,133 to support the affordable housing trust fund, and does council support an EDA levy of $375,000 to support ongoing spending in the development fund?” Kruger asked.

The question matters for residents because Hennepin County will use the preliminary levy to prepare mid-November property-tax estimates that households receive with a notice of the December truth-in-taxation hearing. Council members and staff repeatedly told the public that the preliminary levy is the maximum the city can certify in September; council can lower the levy before final adoption but cannot increase it after tonight.

Kruger and staff laid out the budget rationale: the general fund accounts for the largest share of property-tax levies and faces upward pressure from payroll and benefits costs; internal service funds (technology, buildings, fleet) were being transitioned to a department chargeback model to reflect true operating costs; the employee benefits fund was proposed to rise to support retiree and other benefit spending; and one-time federal and state funds used in recent years have left some funds structurally imbalanced unless addressed. Kruger said the city had identified roughly $200,000 in operating reductions that partially offset increases.

Kruger also told council that the EDA fund balance is roughly $9 million and the Affordable Housing Trust Fund holds more than $7 million. She described the EDA levy increase to $375,000 as the second year of a two‑year plan to align the levy with typical ongoing development‑fund spending and to preserve most of the fund balance for strategic purchases.

Council members asked for detail on impacts to homeowners. Kruger and staff warned that changes in taxable market values — particularly falling commercial values — can shift the tax burden onto residential properties. After the county released taxable-market-value figures in early September, staff estimated that a median-value homeowner could see a notably higher percentage increase in their city tax bill than the 8.02% levy increase alone would imply; staff cited illustrative estimates in the 15%–18% range for a typical single‑family homeowner under current assumptions. Kruger emphasized those are estimates that depend on market-value shifts and other assumptions.

Several council members urged bolder reductions before final adoption to reduce the one‑year burden on homeowners. Karen Barton, community development director, advised that both the EDA and the HRA funds have fund balances large enough to cover planned 2026 activity if the council chose to pause or reduce levy contributions for a year. “There is enough fund balance to certainly cover our expenses going into the next year for what we have budgeted in both the development fund and the affordable housing trust fund,” Barton said.

Council debate produced two main directions: (1) several members supported adopting tonight’s preliminary maximum levy to allow county notice deadlines to be met while giving staff explicit direction to return with concrete reduction scenarios; (2) other members asked staff to prepare specific alternatives, including targeted reductions to the EDA levy and potential temporary changes to HRA levy contributions, and to model the distributional effect on typical homeowners.

Procedural timeline given by staff: the county will mail estimated bills mid‑November; the city’s truth‑in‑taxation public hearing is scheduled for Dec. 1; and the council will adopt the final levy and budget on Dec. 15. Staff also plans an October brief on tax‑increment‑financing (TIF) district management and will bring formal proposals and scenarios for levy reduction in the coming weeks.

Council action: the council voted to adopt the preliminary 2026 levy and related HRA and EDA levy amounts as the maximum for truth‑in‑taxation notice purposes. The council recorded the motion and directed staff to return with detailed reduction scenarios, including analysis of how reductions would affect the city’s ability to sustain programs and any implications for state matching funds.

What’s next: staff will provide the council with modeled alternatives and the pros and cons of each option, including the potential effects on eligibility or reporting for new state affordable‑housing aid, and will present TIF management recommendations in October. The council will consider reductions before final adoption on Dec. 15.

— Amelia Kruger and Karen Barton were the primary staff presenters; multiple council members took part in deliberations.