At a July work session, Hastings city staff presented a first draft of the 2025-26 budget and warned that new state laws limit how much the city can increase property-tax requests in future years. The presentation explained the budget assumptions and the consequences of the recently enacted Property Tax Growth Limitation Act.

The draft keeps the city’s current levy unchanged and, under staff assumptions of a 10% increase in valuation and 2% growth, proposes a tax asking of just under $9.3 million. Staff said the statutory cap without exceptions would be about $9.472 million under those assumptions.

Why this matters: new state legislation changes how unused tax authority carries forward and creates a separate exception category for public-safety spending. That alters multi-year planning because a municipality that does not use its full authority in one year can lose most of that unused capacity for future years.

City staff described the mechanics of the law. The Property Tax Growth Limitation Act (referenced in the meeting as LB 34 and clarified by LB 647) bases this year’s allowable asking on last year’s asking, plus a county-determined growth factor and an inflation factor set by the state. A staff presenter explained, “you take last year's property tax asking… then the next thing you can do is you can increase by the growth factor and the inflation rate.” The presenter also noted that the state used December 31, 2024, to set an inflation factor of 5.17% for the current calculation.

The presenter told council members that public-safety budgets (police, fire, ambulance, 911) qualify as an exception under the new law, meaning a city may carve those costs out of the cap if it chooses. The presenter added, however, that the law no longer treats unused authority the same way the prior restricted-fund lid did: most unused capacity is lost rather than carried forward, with only a 5% carry-forward allowed.

Staff also reminded the council that LB 644’s joint public-hearing requirement (the so-called “pink postcard” process) remains in effect. As staff put it, if the city’s tax asking exceeds the LB 644 threshold (2% plus the county growth factor), the city will be required to attend a joint public hearing with the school districts to explain the request.

City staff sought to put the numbers in context. Using conservative sales-tax projections and the valuation assumptions above, staff said the draft general fund operating budget is balanced under those assumptions. The risk they identified is capital spending: without additional revenue sources, recurring capital requests would be paid from cash reserves and could drive the city’s ending general-fund cash balance down markedly over the coming years.

Staff outlined the near-term budget schedule: the August work session will be the next formal review, with the potential for a first vote at the end of August and three voting opportunities in September if needed. A staff member told council, “this is step 1 of the official budget process,” and invited questions and follow-up before the next session.

Discussion vs. decisions: the council reviewed and discussed the draft and assumptions; no final vote on the budget or levy took place at the work session. Staff emphasized the need to consider the multi-year consequences of how much tax authority the city uses this year.

The council will revisit the draft in August and may face a joint public hearing in September if the proposed asking exceeds the LB 644 threshold.