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 district’s 2026 levy was revised from about $450,000 down to $250,000 after the $5 million pedestrian‑bridge project was moved out of the plan. - Use of 2024 positive variance: the city ended 2024 with a $4.4 million surplus. Carlson said, “we are proposing that 2,550,000.00 could be dedicated to stabilizing the 2026 tax levy,” and that transferring the $4.4 million to strategic priorities would raise available balances above $10 million when combined with an existing $6 million balance. - Personnel and benefits: projected personnel cost growth was lowered by about $1.1 million and the city expects roughly $850,000 in health‑insurance savings after a favorable claims‑to‑premium result within the Minnesota Healthcare Consortium.

Carlson summarized: together the levers equal about $7.4 million in reductions and bring the preliminary levy down to 9.44%, which staff described as the maximum the council could set in September and a number that could be reduced before the final levy is adopted in December.

Budget composition and calendar

Staff presented a preliminary general fund overview showing property taxes at about 68% of general fund revenues, lodging and admission taxes at roughly 9%, and public safety consuming nearly half of general fund expenditures (police about $41,000,000 and fire about $17,000,000). Carlson listed key budget calendar dates: the council will set the preliminary levy Sept. 8; staff will continue refining the budget through priority‑based budgeting work; Oct. 20 is a study session on utility rates; Nov. 17 is the scheduled setting of 2026 utility rates; the Truth in Taxation public hearing is Dec. 8; and the final budget and levy adoption is planned for Dec. 22.

Public comment and affordability concerns

Three residents spoke during the public comment period. Luminita Volmer said she and her husband are retired and described the burden of rising property taxes: “our property taxes are 2 and a half my income from social security.” Bob Volmer asked about the ice‑garden renovation and whether school‑district decisions affecting Kennedy High School hockey had been considered; the mayor responded that the school‑district decision and the city’s ice‑garden project were separate matters.

Julene Bergerson asked whether the 9.44% levy “equal exactly what our property taxes are going to increase?” Carlson and the mayor explained that the levy percentage is an overall city levy change but not a one‑for‑one change in an individual homeowner’s bill because final property‑tax bills reflect other taxing jurisdictions (county, school district, watershed, park district) and property‑specific assessment changes; Carlson said the city assessor will provide median‑home impact estimates at the Sept. 8 meeting.

Council questions, discussion and staff responses

Council members asked for more details on several items. Council member D’Alessandro asked for the commercial/residential split; staff said they would provide that data but expected it to remain near prior years’ roughly 50/50 split. Council member Carter asked whether the $6.3 million in anticipated government grants (largely SAFER grant funds for fire and public‑health grants) were secure; staff said they were “cautiously optimistic” and that recent reimbursement requests for the SAFER grant had been processed quickly.

Multiple council members emphasized continuing work on priority‑based budgeting (PBB) to align programs with city priorities and identified follow‑up topics they expect to review in more detail, including: sponsorship/advertising revenue forecasts, grants strategy, enterprise fund health (golf, ice garden, pool/aquatics), forestry diseased‑tree removals, and the use of strategic one‑time funds to address short‑term capital or service needs. Council members also debated service choices — for example, how to handle sidewalk snow removal — and asked staff to model out long‑term effects of different levy choices on out‑year budgets.

Distinguishing discussion, directions and formal actions

Discussion only: council deliberated and asked staff for more data on commercial/residential levy splits, median‑home impacts, grant assumptions, and enterprise‑fund conditions; no policy changes were made at the study session. Direction/assignment: staff will compile and share community feedback from outreach and the Let’s Talk Bloomington portal, provide median‑value home impact numbers at the Sept. 8 meeting, and return additional detail on Normandale District projects and enterprise funds as requested by council members. Formal action: the council took one procedural action to adjourn. Motion by Council member D’Alessandro, second by Council member Muah to adjourn passed 7‑0.

What remains unresolved

Staff presented a preliminary proposal that narrows the levy from the original forecast but repeatedly emphasized the figure is preliminary. The SAFER grant expiration in early 2026 remains a key risk to the 2026 budget; staff said they have modeled partial mitigation using special‑revenue fund balances and a phased approach to avoid a single large spike to the levy. Council members repeatedly requested additional scenario and multi‑year forecasting so they can assess tradeoffs between lowering the levy now and the effect on future budgets.

Ending

City staff will return on Sept. 8 with the formal preliminary levy and with median‑home impact figures from the assessor; additional budget study sessions are scheduled through December before the council adopts the final 2026 budget and levy. Residents who wish to provide feedback were directed to the city budget page (blm.mn/budget) and the Let’s Talk Bloomington survey link posted on that page.