Fargo presents balanced 2026 preliminary budget citing state tax cap, public safety sales tax

Mayor and city budget staff presented Fargo’s 2026 preliminary budget at the Aug. 4 City Commission meeting, asking the commission to adopt a maximum property-tax levy under a new state revenue cap and to set a public hearing for Sept. 15.

The preliminary budget totals $140,287,211 and is presented as balanced without drawing down reserves, city officials said. It reflects two major shifts this year: a state-imposed property-tax revenue cap and the first full-year impact of a voter-approved public safety sales tax.

The proposal matters because the state cap limits how much property-tax revenue municipalities may collect year over year, and the new sales tax provides a restricted, sustainable revenue stream for police and fire operations. Together, those changes altered how commissioners and staff balanced recurring personnel and operational costs against flat core revenues.

Mayor (presenting) said, "This year also introduced 2 major shifts, the implementation of state imposed property tax revenue cap and the integration of a new public safety sales tax." Budget presenter Susan Thompson added that the cap calculation allows cities to use an "adjusted year" that includes new growth.

Key numbers and allocations

- Total preliminary general fund budget: $140,287,211. - 2025 general fund (for comparison) approved at $132,344,952. - Proposed 3% cost-of-living adjustment (COLA) for employees. - Public safety sales tax: estimated revenue $8,670,000 for the year; approximately $5.9 million is budgeted to the general fund to pay police and fire operations, about $1.8 million to a capital fund for vehicles, and $638,000 to a reserve for future fire upgrades pending a facility study. - Transit transfer: $3,500,000 (unchanged from 2025); city will internalize MAP bus drivers as city employees effective Jan. 1, 2026. - Structural staffing changes: a permanent reduction of 9.8 authorized but currently unfilled FTEs. - Solid waste and recycling: residential garbage rates proposed to increase $1 per month (recycling to $2/month total residential); commercial and roll-off rates and landfill tipping fees proposed to increase about 16%. - Capital requests funded: $1.8 million from the public-safety sales tax and $3.0 million for other departments; larger capital items include fire apparatus lease payments, public works equipment, and IT hardware/licenses.

How the budget was balanced

Staff described a mix of revenue enhancements, fee adjustments, grant pursuance, and targeted operating changes that together closed a previously identified shortfall. Officials said the initial baseline and known changes produced a gap (discussed at the open budget workshop) of roughly $6.4–$6.8 million, equal to about 4% of the general fund. The balanced preliminary budget reflects a combination of: reallocating some engineering salary costs to utility enterprise funds, identifying state and county grants to cover specific services (notably in public health), introducing modest fee increases for solid waste and recycling, and targeted program scaling or eliminations.

Officials emphasized choices were targeted rather than across-the-board cuts: "These included scaling back programs, eliminating underused resources, and align[ing] services with actual demand," the mayor said. Staff also proposed a citywide compensation study to inform longer-term pay and retention strategies.

Policy changes and next steps

- The mayor proposed reclassifying the mayoral position to full-time effective June 1, 2026; the record shows that reclassification as part of the preliminary proposal. - Staff will transfer certain engineering costs to utility funds to better align utility rates with actual service costs. - Commissioners asked staff to return with a memorandum of understanding review with the airport authority (including potential triggers tied to reserves or parking revenues) after the imposition of the 3% cap; county funding was cited as covering the city’s usual $100,000 contribution to the local Economic Development Corporation.

Meeting procedure

City staff asked the commission to adopt the preliminary budget as the maximum levy allowed under state law and to schedule a public hearing for Sept. 15. The motion language presented to commissioners was described as approving the budget as presented and setting that hearing; no formal vote result on that motion is recorded in the transcript.

What commissioners and staff said

Commissioners praised the added open workshop step and multiple follow-ups with staff, while some raised concerns about timing and public review: Commissioner Pippkorn said receiving the full proposal only hours before a scheduled vote was "totally unacceptable" and indicated he intended to vote no if asked to approve the preliminary budget with only five hours’ review time. Commissioner Strand urged developing a policy for evaluating non-core funding requests. Commissioner Kolpack emphasized documenting the real impacts of the 3% cap for future legislative discussions.

Why this matters going forward

Officials said the 3% statutory cap reduces municipal flexibility to raise property-tax revenue for new large capital needs or service expansions and that cities should document impacts for lawmakers. The public safety sales tax provides a dedicated funding source for police and fire, but staff noted it alone does not eliminate other pressures on pay, benefits and aging facilities.

The commission was asked to act tonight only to set the preliminary levy and public hearing; staff stressed commissioners retain the authority to make further cuts or adjustments before final adoption on Sept. 29 following the public hearing.

Ending

Staff scheduled a public hearing for 5:05 p.m. on Sept. 15 and indicated the final budget vote remains scheduled for Sept. 29. The transcript records discussion, questions and some objections about timing and priorities but does not record a final vote on the motion to adopt the preliminary budget.