Isanti City council reviews 2026 budget options after packet correction to levy figures

Isanti City held a budget work session where staff reviewed the 2026 budget schedule and corrected a packet error about the general fund levy.

City staff presented two draft budgets: one that includes a proposed tax-rate increase and one that holds the rate steady and uses reserves to balance the books. Finance director Nick summarized the assumptions built into the draft and the revenue and timing issues council members pressed staff to clarify.

The correction. Staff flagged a mistake in the meeting packet: the general fund levy percent change was listed as 13.31% but “it should have been 6.12%,” Nick said. Council then approved the meeting agenda with that notation; the motion carried 4-0.

What staff told council. Nick said the draft budget applies a 3% cost-of-living adjustment to wages and step increases, assumes no additional staff for 2026, and uses 2025 insurance rates with an assumed 10% increase for health insurance and 5% for dental. He said union contracts for 2026 are not yet settled and could change wage assumptions. On the fund-balance front, the initial draft assumes $0 will be added to reserves for modeling purposes.

Two scenarios. Nick described two principal options: a budget that raises the tax rate by a projected 4.63% (document page 5) and a second plan that keeps the tax rate flat while using fund balance reserves to close the gap (document page 7). Staff said the tax levy and tax-rate choices are linked to revenue assumptions and will be revisited as more precise figures become available.

Projected revenue changes and timing. On the general fund summary staff showed several revenue shifts: one scenario ties to a 13% increase in regular revenue, while license and permit revenue is budgeted 38% lower to reflect a conservative outlook on new development. Intergovernmental revenue (mainly local government aid) was projected to rise slightly; staff said preliminary numbers had been shared and that final state/local figures are expected July 31. Staff reminded council the preliminary budget window is around Sept. 30/Oct. 1 and the final budget is due in November.

Public-safety and fines. Staff noted charges for services are up about 4%, driven by a BMX lease and increased school resource officer contract reimbursements to the police department. Fines and forfeitures were budgeted lower because a new police records-management system has reduced the number of tickets issued. Travis, speaking for the police, said one-month data show “about 50... some percent less citations written per month over last year” and that the department and partner agencies are meeting to address the system issues.

Cost sensitivities. Council asked about the work-comp and insurance assumptions. Nick said work-comp is modeled with a 25% deflationary factor from recent peaks; he gave the current work-comp cost as “right around 103,000” and noted that, with no change, that would equate to “around $1.25 for the general fund,” characterizing the figure as an estimate that could swing about $25,000 if assumptions change.

What’s next. Staff said they will continue refining assumptions as final state and county numbers arrive; the council will resume detailed department reviews at the next budget session, including parks, water and sewer if time allows. No formal budget adoption occurred at the work session.