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East Bethel officials outline proposed 2026 budget, 3.8% levy increase
Summary
City staff presented a proposed 2026 general fund budget that would raise the city levy 3.8%, use $200,000 of accumulated fund balance and transfer $100,000 from the water fund to debt service to balance the books; the council is scheduled to consider a preliminary levy Sept. 8.
East Bethel officials presented a proposed 2026 general fund budget July 14 that would raise the city property tax levy 3.8% and use one-time fund balances and an interfund transfer to balance the budget. City staff said the package would increase general fund expenditures by about $479,400, or roughly 7% compared with the prior year.
City staff member Mike (staff member) said the levy increase would equal about $246,100 and that the proposal relies on using $200,000 from accumulated general fund balance and a $100,000 transfer from the water fund to the debt service fund to reduce the levy requirement.
The proposal, officials said, includes several cost drivers: an 8% cost-of-living adjustment tied to union contracts for multiple employee groups; a law enforcement contract increase embedded in the model; higher costs for elections in an election year; and a new line for the state-mandated Minnesota paid leave program. Staff also included a $40,000 placeholder for CivicPlus website/modules implementation and increases for equipment replacement transfers and capital transfers.
The city’s budget book divides expenditures into general fund, special revenue, debt service, capital projects and enterprise funds; staff said the council’s primary focus during the work meeting was the general fund, which covers public safety, public works, community development and general government. Staff and department heads presented department-level details and answered council questions.
Mike and Matt (staff member) told the council that the timeline calls for the council to consider adoption of a preliminary budget and levy on Sept. 8; after the preliminary adoption the levy can be decreased but not increased before the final levy and budget action later in the year.
Why it matters: the proposed levy change affects taxpayers directly and relies in part on one-time fund balance and an interfund transfer, choices that reduce near-term property tax increases but do not eliminate future pressure from multi-year labor agreements and recurring cost drivers. The council asked staff for further detail on fund-balance limits and on which items might be deferred to lower the levy further.
Less-critical details: staff said property-tax revenue remains the largest single revenue source; franchise fees, building permit revenues and state aid were included in revenue projections. Staff reported the audited 2024 fund balance at about $5.2 million and estimated roughly $5.0 million at year-end 2025 before using $200,000 for 2026. The council did not adopt the budget at the July 14 meeting; the work session was a presentation and question-and-answer step in the process.
