Cannon Falls council adopts preliminary 2026 levy, schedules Dec. 16 public hearing

The City of Cannon Falls City Council on Sept. 16 approved a resolution adopting a preliminary tax levy and draft budget for taxes collectible in 2026 and set a public hearing for Dec. 16 at 6:30 p.m.

City staff framed the vote as setting a ceiling for next year’s levy while the council and staff continue to refine expenditures and project costs. “I really do believe that the city of Cannon Falls is in a really strong financial position,” a staff member said during a detailed budget presentation that preceded the vote.

Why it matters: The preliminary levy sets the maximum the council may levy next year; the final levy can be lowered but not increased. Staff presented projected fund balances, long-range capital needs and proposals intended to smooth past “roller-coaster” levy swings that resulted from sporadic large purchases.

Staff said the city holds about $14,000,000 in cash and investments, much of it reserved for projects. Outstanding principal on city debt was described as about $5,400,000, down from a peak nearly 20 years ago. The preliminary general-fund budget was presented at about $5,200,000, and the proposed levy amount shown in the presentation was roughly $3,972,000.

Staff highlighted several cost pressures and planned uses of reserves: - Ambulance service funding: The city operates a largely fee-based ambulance service and staff said reimbursements from insurers, Medicare and Medicaid often do not cover costs. Staff noted a recent state program intended to assist rural ambulance systems but said details on distribution remained pending. - Facilities and equipment: City Hall and the Public Safety Building show aging infrastructure. The North Water Storage Reservoir (a 500,000-gallon tank on the north side) was called out as roughly 50 years old and in need of repair or replacement; staff estimated a low-end repair cost could be about $500,000. - Fire and ambulance capital: The budget moves a transfer into the fire fund to make equipment purchases more transparent. Staff described options to lease medical equipment (Stryker devices) for ambulances, estimating savings of $18,000–$30,000 per year under a proposed lease plan compared with current replacement practices. - Trees and trails: The draft budget includes a $50,000 increase for tree removal work to address ash-tree loss from emerald ash borer, and continued discussion about trail maintenance funding. - Comprehensive plan: Staff included $40,000 to begin an update to the city comprehensive plan (last revised in 2003) and said a proposal from a planner the city is negotiating with (CETA) is expected to be within that amount.

Staff presented options that would reduce the proposed levy increase; a scenario placing $400,000 of municipal reserves against projects reduced the projected median homeowner increase to about $118. Staff recommended setting a higher preliminary levy to preserve flexibility and to refine numbers before the December final levy.

Council action: Councilmember Chad Johnson moved to adopt the preliminary levy resolution; a council member identified as Chris seconded the motion. The council voted in favor and the motion carried. The council set the final levy hearing for Dec. 16 at 6:30 p.m.

The presentation included multiple areas staff said will require more analysis before the final levy (Fourth Street project cost estimates, potential bonding versus pay-as-you-go for future projects, and final figures for state aid and industrial rate discussions). Staff repeatedly emphasized that the preliminary levy merely sets a ceiling and that the final levy will be set when project costs are better known.

The council did not change utility rates in the presentation; staff proposed leaving water, wastewater and storm rates flat for the coming year, while noting potential future work on significant industrial user (SIU) rate structures required by MPCA standards.

Council members who spoke thanked staff for the work and said they had been briefed in prior work sessions. The formal vote approved the resolution and scheduled the public hearing for December.