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Staff presents 12.23% preliminary levy estimate; council asks staff to study utility PILOT alternatives
Summary
At a Aug. 25 budget workshop, city staff presented a proposed balanced 2026 budget that currently requires a $7.97 million levy (a 12.23% increase). Council members asked staff to study alternatives to the current per-kilowatt PILOT allocation and delayed setting the preliminary levy until updated insurance and RFP figures are available.
City staff presented the Brainerd City proposed 2026 budget at an Aug. 25 workshop and said the working funds as currently estimated would require a preliminary levy of $7,966,136 — a 12.23% increase over 2025.
The presentation, led by city staff (introduced in the meeting as Tanya), covered the general and three special working funds (public safety, parks and recreation, and streets), debt service, and capital. "We are here tonight to discuss the 2026 budget and levy," the staff presenter said, outlining operating expenditures, proposed capital projects and revenue assumptions.
Why it matters: the preliminary levy certified to the county by Sept. 30 is used to generate the tax notices mailed to residents in November; the final levy certified by Dec. 31 may be lower but cannot be higher. Staff stressed several figures remain estimates pending insurance RFP responses and final contract numbers.
Key details from the presentation included a projected operating-expenditure total of $14,177,505, personnel-services increases of $619,084 (with no net change in full-time equivalents in the working funds), and a capital levy maintained at $1,180,927. Staff said the cash planned for 2026 totals roughly $7.81 million in capital spending and that EDA and airport commissions requested increases (the EDA sought the maximum allowed by state statute; the airport requested $215,000 from city and county). The presenter also listed software and professional service increases and an estimated $20,000 cost related to the state paid-family-leave requirement.
Council questions focused on revenue structure and timing. Council member Gabe pressed staff on the city's current payment-in-lieu-of-taxes (PILOT) arrangement with the municipal utility (BPU), which is structured as a per-kilowatt charge (staff cited 0.0045 per kWh for certain customers and 0.00025 per kWh for medium/large customers). "I would really like staff to look at what other municipalities are doing and bring options back to the council," Gabe said, urging staff to compare a per-kWh approach with percentage-of-revenue models used elsewhere.
Staff acknowledged the request and committed to returning options and analysis; council members generally supported delaying a high preliminary levy until the city receives insurance bid results and other outstanding numbers. Several members noted the council can set a preliminary levy at the Sept. 15 meeting or call a special meeting before the Sept. 30 certification deadline.
No formal levy was set at the workshop. The meeting closed after a short final discussion and a motion to adjourn was adopted.
What’s next: staff expects RFP results and additional budget updates in September and will return with refined levy recommendations and options for the PILOT allocation. The preliminary levy must be certified to the county by Sept. 30; the final levy must be certified by Dec. 31.
