Fargo finance staff previews 2026 budget process, flags public safety pay plan and sales-tax as central issues

Susan Thompson, a city staff member, told the Fargo City Commission that preliminary, unaudited year-end results for 2024 show revenues ahead of expenses and that staff will begin the 2026 budget process earlier than in prior years.

Thompson said year-to-date figures through the January accounting period showed revenues exceeding expenses by about $1.1 million and that, after outstanding state payments and pending grant awards settle, she currently projects a year-end surplus of about $340,000. She cautioned the numbers are preliminary and the audit begins in March with preliminary audit information expected in June.

Why it matters: Thompson said the commission must consider a public-safety compensation plan, now under development, and a proposed public-safety sales tax when balancing revenue and expense choices for 2026. The commission’s decisions on compensation will influence the structure and size of the general-fund budget and capital planning.

Thompson outlined an expedited calendar: department heads will start submitting requests earlier in the spring; a finance-committee meeting in April will include a public-safety compensation plan developed with HR and consultants; cabinet-level review will occur in May; and statutory requirements for the mayor’s preliminary and final budgets take effect in mid-July.

Commissioners pressed for more transparency and community engagement. Commissioner Colton asked for clearer year-to-year accounting of midyear budget adjustments; Thompson said salary adjustments are tracked and she will follow up on other adjustments offline. Commissioner Strand and others pushed for cabinet-level priorities and a personnel and capital plan to accompany department requests; Commissioner Strand asked the cabinet to return recommended priorities and a multi-year personnel and capital strategy. Thompson acknowledged that request and said cabinet work on priorities is underway.

On revenues, staff highlighted risks to property-tax growth from a pending state legislative proposal that would cap revenue growth at 3 percent (excluding new growth). Thompson estimated 3 percent of the city’s property-tax base would be about $1.3 million; she used 2.75 percent in modeling to illustrate impacts. Other revenue sources discussed: franchise fees (electric, weather-dependent), licenses and permits (building activity), state aid and highway distributions, and transfers from enterprise funds (capped at 20 percent of enterprise gross revenue).

On expenses, Thompson said salaries and benefits account for roughly 70 percent of the general fund; she gave a step-plan cost estimate of approximately $1 million and estimated each 1 percentage-point increase in insurance costs would add about $100,000 to the budget. She urged commission guidance on priorities and flagged information-services software subscriptions, consultants, and energy costs as near-term review items.

Commissioners asked staff to consider consolidation of citizen advisory committees as a potential cost-savings item; Thompson said committee consolidation work is scheduled for the first half of the year.

Ending: Thompson said staff will return with the public-safety compensation plan and additional budget details on the timetable described, and the commission signaled support for early engagement with the public and a cabinet-produced, department-level priority framework to guide budget requests.