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Eagan staff preview 2026–27 budget pressures; 2026 levy projected to rise near 9%
Summary
City finance staff told the council the 2026 tax levy is preliminarily projected to increase about 9% from the prior year, driven by debt for recreational facility bonds, personnel cost increases and a new employer premium for Minnesota Paid Family Leave; staff will return with a full proposed budget in August.
City finance staff delivered an early preview of the 2026–27 operating budget at the June 10 workshop, telling the council the city is facing multiple upward pressures and that the 2026 tax levy is tentatively estimated to rise about 9% for baseline services.
Why it matters: the levy estimate shapes property tax planning and the fall budget process; council priorities (staffing additions, service levels, new programs) will determine whether the levy is revised higher or mitigated by other revenue choices.
Drivers of the projection Assistant Finance Director Brent Boyse and City Administrator Diane Miller outlined fiscal factors building into the 2026 baseline:
- Debt service for 2024–2025 bonds (Eagan Art House and Goat Hill) and newly issued bonds for Eagan Community Center improvements will be added to the 2026 levy; Boyse said the ECC bonds add roughly 1.9 percentage points to the levy for 2026. - Employer costs: the new Minnesota Paid Family Leave program takes effect in 2026 and carries a 0.88% payroll premium; employers must pay half of the premium. City staff estimate that program will cost the city roughly $275,000–$325,000 in 2026. - Personnel baseline: staff programmed a 3% cost‑of‑living adjustment for 2026 and 2027, a 10.5% health‑insurance premium increase for 2026 and continued step increases for newer employees; some union contracts remain unsettled and were conservatively estimated. - Communications and franchise fees: cable franchise revenue has declined with cord‑cutting and streaming, and the city has been incrementally moving communications costs to the levy; staff noted the city’s franchise agreement expires in 2028 and will require review.
Boyse summarized the topline estimate: the baseline levy increase for 2026 is approximately 9% (an estimated $2.8 million, or 5.3%, attributable to personnel cost assumptions within that total). He said 2027's baseline increase is currently estimated at about 5.9%, assuming those same pressure items and no new council‑level additions.
What happens next City staff will meet with department directors starting the week after the workshop to review specific budget requests and any proposed new positions or programs; the full proposed 2026–27 budget is scheduled for a council workshop in August. Staff asked the council for early direction on service‑level priorities and any potential tradeoffs to reduce the levy pressure.
Ending Council members asked questions about the make‑up of the levy estimate, the treatment of community center staffing and the franchise‑fee outlook; staff said the August workshop will present a full proposed budget and tax‑rate estimate with more concrete numbers for decisions before the fall levy certification.
