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Dayton staff lays out preliminary 2026 budget with possible levy increase, $195 annual hit for average homeowner
Summary
City staff told the council that required contract and benefit costs, a proposed ladder-truck cash plan and rising recycling and public-safety expenses leave the city looking at significant levy pressure; staff offered cuts and alternatives but asked council for direction.
City staff presented a preliminary budget framework for 2026, telling the mayor and council that required salary and benefit increases, union contract changes and capital plans could push the city toward a sizable levy increase. Finance staff said the city’s average homeowner — cited as roughly $525,000 in market value — could see about a $195 annual increase under one 18.97% levy scenario presented.
The presentation opened with a primer on levy mechanics. The Finance Director said, “the levy is the actual tax dollars that are given to the city in a year to operate” and explained that the levy amount is set in December and cannot be adjusted until the following year. Staff walked council through illustrative examples showing how tax-capacity growth and levy choices interact to change the tax rate and a homeowner’s bill.
Staff presented updated June figures showing an 8.1% change in tax capacity for 2026 and said a 1% levy change corresponds to roughly $88,000 in city receipts. Using staff’s preliminary numbers, staff estimated the 18.97% levy scenario would raise the average home’s annual city share by about $195. The Finance Director cautioned that the example reflected city-only taxes and did not include county, school or state portions of residents’ bills.
On the spending side, staff identified roughly $573,000 in increases they characterized as required: salary and benefit changes driven by existing contracts, state-paid leave contributions, and insurance costs. The largest operating increase noted was for police — presented as roughly $534,000 — which staff said was largely baked in because of recently negotiated unit contracts.
Capital needs were a central driver of the conversation. Staff outlined a multiyear plan to save cash for a ladder truck by adding roughly $300,000 to capital equipment allocations each year so the vehicle could be purchased with cash rather than financed. “If we keep the same levy number,” staff said, “we’re looking at increasing that by 300 grand.” Councilors asked whether the ladder-truck increment could be scaled back — for example, $150,000 instead of $300,000 — and staff replied that dialing that figure down would free dollars but would also require reshuffling other CIP purchases or postponing the ladder truck.
To offset required increases, staff presented about $325,000 of potential cuts and timing changes: delaying or reducing consultant work on the comprehensive plan, shifting midyear hires, and reconsidering part‑time or midyear positions. Staff stressed tradeoffs, noting that cutting across the board could mean fewer services or deferred projects.
Council members raised concern about how county and state budget actions affect residents’ tax bills. Staff said many state-driven changes operate at the county level and that the city’s role would be to communicate clearly with residents if taxes rise from multiple sources.
The Finance Director closed by asking departments to identify 10% savings options and by requesting council direction on the ladder-truck plan and other priorities. The council did not take formal action at the work session; staff said it will return with refined options and that the budget work will continue in follow-up meetings.
