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New Prague council reviews 2026 budget options, weighs smoothing police station levy
Summary
City staff presented a first pass at the 2026 budget, warning of a likely levy increase in collect 2027 tied to police station debt and proposing a 4% wage COLA, benefits vendor changes and modest equipment-fund set-asides; council asked staff to test options and scheduled a follow-up budget session.
Mayor (speaker 3) called the special New Prague City Council meeting to order and the council approved the agenda 4-0. Josh, a city staff member, opened the discussion and said staff had included all budget documents in the packet and planned to review four topics: budget goals, wage/salary adjustments, insurance/benefits, and the capital improvement program and equipment for 2026.
Josh told the council the primary budget pressure was debt service tied to the new police station, which is expected to affect the collect 2027 levy. He said staff had modeled assumptions including a $1.5 million mill-and-overlay project and other CIP items and that those assumptions produced a notable levy spike in the 2027 collect year. He asked whether the council wanted to consider a partial transition levy in 2026 to smooth that effect and explained alternatives including using cash reserves for an initial interest payment or levying in the year the payment is due. Josh said Ehlers would prepare a presale report for the EDA and that bond sale timing would determine when cash would be received; staff expected sale activity after an early-October EDA action.
The council pressed staff for numbers. One staff member reported a preliminary Ehlers-based estimate for principal and interest in 2027 of about $750,009.18; Josh cautioned that figure is an estimate until a bond sale is completed. Council members asked whether existing bond roll-offs (notably a fire station levy in 2028) would moderate future levies and whether the city should prepay initial payments using cash set aside in the city facility projects fund. Josh confirmed the facility fund had been used previously for the parks building and that staff would provide details on available balances and prior-year prepayments.
Council members also discussed the equipment fund strategy. Staff described a policy of keeping a $1,000,000 baseline and using the difference between that baseline and the debt-service levy to seed an equipment fund. For 2026 staff proposed setting aside $268,135 and drawing $240,000 for planned equipment purchases, leaving a small balance for future needs. Several council members cautioned against deferring necessary equipment solely to make the police station appear more affordable; public works staff explained that equipment requests are prioritized as needs and that some items had been pushed back in earlier budget cycles.
On compensation, Josh recommended a 4% cost-of-living adjustment as a starting point to reflect mid-year CPI movements and as a buffer while a compensation study is finalized; he said the city's model showed roughly $17,000 in levy impact per percentage point of COLA (about $20,000 including employer benefits). Some council members preferred a 3% placeholder; staff agreed to take direction and sharpen the budget to a target percentage if council so directed.
On benefits, staff recommended switching the city's life and short-term disability coverage to MetLife after soliciting quotes, noting an estimated short-term disability savings of approximately $1,400 that would reduce overall city costs. The meeting also covered Minnesota's Paid Family Medical Leave (PFML); staff modeled a 50/50 employer-employee split in the budget, which staff said would carry roughly a $20,500 city share under the MetLife quote (the full city-paid MetLife cost estimate was about $41,071).
Other items discussed included a single full-time public works maintenance position worked into the general fund (converting a previously split halftime arrangement into one full FTE), planned reductions in golf-course subsidies if the course is cash-flowing, and park-board requests for a $30,000 city-center master-plan allocation (staff said some pond-design costs are grant-funded but landscaping and related items are not). Council members asked staff for the original equipment plan versus the updated list of deferrals and for clearer county valuation details for Le Sueur and Scott counties.
The council set a follow-up budget meeting in the transcript's phrasing for Monday the 20 fifth at 4:30 p.m. to continue the levy discussion and to prepare to set a preliminary levy in September. Josh noted the statutory deadline to set a preliminary (not-to-exceed) levy is at the end of September. Mayor (speaker 3) moved to adjourn at the meeting's close; the motion was seconded and carried.
