Bloomington staff present 9.44% preliminary tax-levy proposal after $7.4M in reductions; council to set preliminary levy Sept. 8

Kari Carlson, a city staff budget presenter, told the Bloomington City Council on Aug. 18 that staff have identified $7.4 million in changes that reduce an initial 2026 tax-levy forecast and produce a 9.44% preliminary levy proposal that the council may set Sept. 8.

The reductions include scaled-back capital borrowing, a lowered Normandale Lake District levy after a major pedestrian-bridge project was removed from that district plan, a proposed transfer of a portion of a $4.4 million 2024 positive budget variance into a levy‑stabilization account, and lower projected personnel and health‑insurance costs.

Why it matters: the preliminary levy number is the maximum figure the council may legally set in September; the final 2026 levy will be adopted in December after further budget refinements. Council discussion and public comments at the study session focused on the effect of higher property taxes on fixed‑income homeowners, how expiring federal and state grant funding will be handled, and whether one‑time funds should be used to stabilize future levies.

City staff presentation and main levers

Carlson said the city’s “initial tax levy forecast was showing an increase of about 15,700,000.0, which would be just under 18%.” She described expiring funding as a major driver of that early forecast: one‑time public‑safety state aid that funded six positions, American Rescue Plan funds that helped pay for three fire battalion chiefs, and the first of two FEMA SAFER grants that had funded 18 firefighters per grant and will expire in 2026.

To blunt the levy impact, staff identified multiple levers: - Capital projects and debt planning: staff pushed or scaled back projects to reduce the 2026 debt‑service impact from about $4.2 million to $1.5 million, lowering debt‑related levy pressure to roughly 1.7 percentage points of the levy change. - Normandale Lake District levy: the…