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East Grand Forks Council set to propose 12% preliminary levy as staff warns of enterprise fund shortfalls
Summary
At a Sept. 9 work session, the East Grand Forks City Council discussed a proposed 12% preliminary levy for 2026 and reviewed enterprise fund shortfalls — especially refuse and sewer — directing staff to prepare a resolution and multi-year financial outlook.
The East Grand Forks City Council on Sept. 9 directed staff to prepare a resolution to set a 12% preliminary levy for 2026, after a multi-hour review of the city’s enterprise funds that highlighted persistent shortfalls in refuse and sewer accounts.
Mr. Hutton introduced the budget packet and told the council the draft contains a levy assumption and a noted shortfall in the materials: "we are still showing that deficit of about 7889,000 additional dollars," and reminded members that the preliminary levy can be reduced before December but cannot be increased after it is set.
Why it matters: council members and staff said the city faces variable and rising costs — union negotiations, health-insurance changes and volatile sewer-treatment charges tied to the interconnect with Grand Forks — that threaten fund balances and the city’s five-month reserve policy. Staff said a multi-year plan is needed to avoid large, unpredictable year-to-year levy spikes.
Carla (staff) walked the council through enterprise fund profit-and-loss and cash balances dating from 2014 through the current budget years, and described recent residential refuse-rate increases already scheduled in three steps (July 2025, Jan. 1, 2026 and July 1, 2026) designed to bring the refuse fund closer to its target reserves. "We will need to come up with a plan over the next few years," one council member said, urging a phased approach to rate adjustments rather than a single large increase.
On sewer operations, staff said costs to treat sewage via the Grand Forks interconnect have varied substantially since the interconnect’s implementation around 2017–2018, with treatment charges in past years cited in the packet as ranging from about $350,000 to $764,000. Those swings, staff said, have produced recent operating losses and eroded reserves. Council members discussed two principal policy responses: modest, steady rate increases for all customers or targeting rates to heavy industrial users that impose higher treatment costs.
On storm water, staff reported the fund is currently in better shape, though members noted that the city’s flood-control infrastructure is aging and will require future investment.
After discussion, Mayor Olstead recommended the council set the preliminary levy at 12% next week with a goal of reducing the final levy to about 7% by December. Council directed staff to prepare the 12% preliminary-levy resolution for the regular meeting and to produce a multi-year fund-balance and expenditure outlook for every city fund to guide longer-term policy.
Next steps: staff will present the resolution to set a 12% preliminary levy at next week's council meeting and will provide the requested five-year outlook and recommended staged rate adjustments for affected enterprise funds.
