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Hermantown approves final levy and 2026 budget after reductions; payroll and property taxes drive increase
Summary
Hermantown City Council approved the final property tax levy and the city's 2026 budget after staff reduced expenditures; the general-fund levy increase is reported as 7.48% while the city's effective tax rate was described as falling nearly 1%. Council also approved several franchise and administrative items.
Hermantown City Council on the evening adopted the city’s final property tax levy collectible in 2026 and approved the 2026 general fund and overall city budgets following staff reductions aimed at lowering the preliminarily proposed levy.
Finance director Kevin Orm told the council the payroll budget accounts for more than two-thirds of city spending and that nearly 90% of general-fund revenue is supported by property taxes. After trimming expenditures, he said, “the overall levy increase for the general fund is 7.48%. Initially, it was over 10%. The effective tax rate for the city, if approved, would actually go down almost 1%.”
Why it matters: the council approved both the levy (Resolution 2025-176) and the city’s final 2026 general fund budget (Resolution 2025-177), which the agenda lists as $9,864,686 for the general fund and $28,022,830 for the overall budget. Orm said the total levy dollars is rising by “between 600 and 700,000” and that roughly 80% of that increase is payroll-related.
Council action and other votes at the meeting: the council moved, seconded and carried the levy and budget resolutions by roll call (all councilors and the mayor recorded “Aye” on the record). The meeting also approved a consent agenda that included a $345,937.75 pay request for Keene Creek Trail Segment 4 and city warrants totaling $1,518,272.92 for Nov. 16–30, 2025.
Other items approved: the council renewed nonexclusive franchise agreements for Mediacom (Ordinance 2025-20) and Minnesota Power (Ordinance 2025-21), approved an ordinance imposing a franchise fee on Minnesota Power (Ordinance 2025-22) to fund streetlights and traffic-signal repairs, and authorized publication of the summary texts of both franchise ordinances. The council also authorized a managed IT contract with Computer Integration Technologies (Resolution 2025-184), approved planning matters for Peyton Acres Phase 4 (Resolutions 2025-185 and 2025-186), and approved a special-use permit for grading/filling in a shoreland overlay (Resolution 2025-187), on which two members announced abstentions.
On accessory dwelling units: the council held a first reading of Ordinance 2025-23 to add a new ADU section (18.30) to the Hermantown zoning code. City staff (Eric Johnson) described key provisions: minimum ADU size of 350 sq ft, maximum 1,000 sq ft, an owner-occupancy requirement, one additional parking space for the ADU, setbacks and height matching underlying zoning, and administrative review with notification to adjacent properties. The ADU ordinance will return for a second reading at the next meeting; no vote was taken tonight.
What’s next: the adopted levy will be submitted to Saint Louis County as the city’s final levy for 2026. The ADU ordinance returns for second reading at the next council meeting; other approvals take effect according to their administrative or statutory timelines.
