St. Paul proposes $887 million 2026 operating budget with 5.3% levy increase

Madeline Mitchell, the city’s budget manager, presented the mayor’s proposed 2026 operating budget to the St. Paul City Council Finance and Budget Committee, saying the package totals “about 887,000,000” and includes a 5.3% property tax levy increase.

Mitchell told the committee the budget begins with “a starting budget gap [in the general fund] of 23,000,000,” driven largely by salary and benefit inflation and other fixed costs. She said the gap was closed using three primary levers: the levy increase, reductions to departmental spending and vacancy eliminations, and updated non-levy revenue projections.

The proposal would fund nearly 3,200 full-time equivalent positions and advances three stated themes: housing and equity, modernizing city services, and community well-being. Mitchell said the mayor’s plan reflects tradeoffs made to balance services and fiscal constraints: “We often refer to the budget as a values document, but it is also a document full of really hard trade offs.”

What’s in the math: Mitchell reported that a 5.3% levy increase generates about $11,500,000 of the gap-closing revenue. Non-levy revenue updates account for roughly $4,100,000 more than prior projections; the city removed about $2,900,000 by not funding certain vacancies and identified $5,400,000 in departmental reductions. She also highlighted targeted new investments, including cybersecurity and district council funding.

Mitchell described the estimated fiscal impact on a typical homeowner. Using a median home value of $289,000, the combined effect of the proposed levy, utility and fee changes would increase a typical household’s city charges by about $232 annually, broken down by line items such as a $107 increase in city property taxes and smaller increases to water, sewer and recycling fees.

Committee members asked for follow-ups on revenue assumptions, specific vacancy lists and the county assessor presentation schedule. Jay Wilms, the city’s chief operations director, confirmed quarterly reports on American Rescue Plan (ARP) fund 02/11 had been shared previously with council staff and said the city would resend them if needed.

The committee did not take a vote at the presentation; departments will give more-detailed briefings to the committee in coming weeks.