Fergus Falls council adopts 2026 budget, sets property‑tax levy at $8.708 million (1.85%)

The Fergus Falls City Council on Dec. 1, 2025, approved the city's 2026 budget and set the property‑tax levy at $8,708,000, representing a 1.85% increase from the prior year. Finance staff described an overall proposed expenditure plan and key cost drivers during a lengthy presentation to the council and public.

Finance director and tax‑levy committee members walked through budget drivers including a large health‑insurance increase (24.9% cited), settled labor contract wage increases (3.5%), higher electric costs estimated at 16% and other utility and liability assumptions. The committee reported extensive meetings since July and presented a set of funding choices and proposed adjustments that reduced an earlier levy estimate of 8.53% down to 1.85% in the current proposal.

City staff said the overall 2026 proposed budget totals approximately $58.9 million in revenues and $56.0 million in expenditures for the city’s combined funds (presentation figures shown during the meeting). The mayor and finance director emphasized that local government aid and grants form important pieces of the funding picture, and that capital projects (streets, bridge work, sidewalk program, and community infrastructure) will rely on bonds, grants and targeted levies in future years.

Council also approved a resolution to prepay a deposit on a new fire ladder truck to capture a 5% return while the truck is built. Finance staff presented two options for the deposit; the council amended the resolution and approved the option that applies $180,000 from the 2026 fire truck line and sets the remaining schedule per the budget plan. Staff explained that fund balances are segregated by state law and that any inter‑departmental loan would require explicit accounting.

During public comment, residents and council asked questions about lead service line funding, council‑chamber technology upgrades, and the bell‑tower repair (insurance claim denied; staff estimating costs and exploring fund balance use). Council members repeatedly praised tax levy committee members, noting the work that reduced the levy projection. The council adopted the levy on roll call and then passed the resolution adopting the 2026 expenditure budget. The council later approved an appropriation to spend $708,683.85 of current year funds for specific items and accepted several consent agenda items earlier in the meeting.

Next steps: staff will continue detailed rate studies for utilities (staff estimated a ~5% increase on a sample utility bill under the draft scenario), pursue grant opportunities for capital projects, and return with further details for specific enterprise‑fund rate adjustments and lead‑pipe funding plans.