New Ulm opens public hearing on 2026 budget, previews 7.36% levy and capital needs

The New Ulm City Council opened a public hearing Tuesday on the proposed 2026 city budget, which Finance Director Nicole Jorgensen said projects a 7.36% levy increase that would raise the typical homeowner’s city tax bill by roughly $47 a year.

Jorgensen told the council the budget process began in May and that a preliminary budget approved in September showed an 8.16% levy increase. "We found some changes since the preliminary," she said, and the presentation reflected a revised 7.36% figure. She flagged two accounting adjustments that reduced the projected levy: a health-insurance budgeting correction and a previously unrecorded interest-revenue entry.

Why it matters: Jorgensen said local government aid remains critical to New Ulm’s finances, noting, "That's 20% of our budget." Without that state aid, she said, the city would have to find roughly $5 million more from property taxes or other charges.

New and one-time revenues: Jorgensen said staff discovered an interest-revenue item that had been entered as $18,000 instead of $187,000, freeing $168,000. She said the city also plans to use an accumulated VEBA trust to smooth near-term insurance cost increases through about 2030. Of the $168,000 correction, Jorgensen said she left $68,000 in the working numbers to reduce the levy and recommended placing $100,000 into the city-facility sinking fund; councilors discussed alternatives including applying the full amount to lower the levy to about 5.99% if paired with other fund-balance moves.

Capital priorities and constraints: Jorgensen outlined capital needs and sinking-fund projects planned for 2026, including library HVAC work (~$82,000), repairs or placeholders for City Hall systems, upgrades at fire facilities (including a $38,000 kitchen project and a $35,000 HVAC item at Goose Town Fire Station), security upgrades for the administration office, and routine fleet replacement. She also said the Civic Center will soon require major work: a preventive roof project was estimated at about $1.2 million and a future refrigeration-plant replacement — plus new concrete for both arenas — could total $12 million to $14 million.

On the park-and-rec side, Jorgensen noted smaller 2026 projects (about $43,000) and said about $15,000 from park-and-rec fund balance would be used to help pay down a roughly $77,000 amphitheater deficit that remains from an earlier over-budget project.

Sales tax and restricted funds: Councilors questioned distinctions among capital accounts. Jorgensen explained that $8.30 funds are restricted donations and do not affect the general levy unless spent, while an older sales-tax account has about $400,000 remaining that could be applied to park-and-rec work or part of a larger Civic Center project. She said the new sales-tax portion that began in 2020 has grown and is currently being used to pay debt; once the debt is retired, those receipts will flow to the projects the tax was created to fund.

Council action: With no members of the public requesting to speak, a council member moved to close the public hearing and approve the revenue and expenditure adjustments presented to the preliminary 2026 budget, allowing staff flexibility for minor changes in arriving at final numbers. The motion was seconded and approved by voice vote.

What’s next: The council closed the work session after the vote. Staff will incorporate the approved revenue and expenditure adjustments and return final budget documents for the council’s future consideration and formal adoption.