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North Mankato council reviews proposed 2026 tax levy, staff backs mid-range scenario
Summary
City Finance Director Ryan presented a proposed 2026 tax levy of $10,184,000 — a 6.27% increase — and three reduction scenarios; staff recommended a mid-range option that trims capital requests and cuts the general fund. Council members discussed funding options for a Public Works project and whether to shift costs to sales tax revenue.
Finance Director Ryan reported that North Mankato’s taxable market value (TMV) for 2026 is estimated at nearly $1.8 billion, about $37 million higher than 2025, and presented a proposed 2026 tax levy of $10,184,000, a 6.27% increase that would generate roughly $601,000 in new revenue.
Ryan said the estimated tax rate would be 48.865%, an increase of 1.385 percentage points from 2025. He told the council the general fund levy would rise by about $335,000 while the capital levy would fall by about $84,000 under the proposal. Ryan also reviewed the five major tax classifications and said the average North Mankato homeowner pays roughly $1,473 in city taxes.
Ryan presented three levy scenarios staff prepared after earlier council direction. Option one would raise the rate 1.731%, reduce the General Fund by $100,000 and cut $3.0 million from capital requests. Option two — the staff recommendation reflected in tonight’s presentation — would raise the rate 1.385%, reduce the General Fund by $124,000 and reduce capital requests by $3,048,094. Option three would limit the rate increase to 0.017% but require an additional $285,000 in capital cuts, for example by removing mill/overlay work, seal coating, or a proposed snow-haul truck.
To illustrate household impacts, Ryan said a house valued at $597,000 would see an annual city-tax increase of about $117; a $504,500 house about $95; and a $370,200 house about $67. He provided sample commercial impacts ranging from roughly $105 to $1,703 annually depending on assessed value. Ryan also reported the top ten taxpayers contribute $757,888 in taxes, about 7.5% of the city’s collected taxes.
During discussion, Council Member Peterson asked whether some projects could be funded from Sales Tax revenue. City Administrator McCann said staff is working with the bond attorney to determine which items could qualify and that staff has identified several candidates. McCann noted the city’s debt service fund will reflect new debt and said Financial Advisor Omdal had developed scenarios for a proposed Public Works building; he said that, depending on bond length, a home worth approximately $350,000 could see an annual levy impact between $241 and $283.
Mayor Carlson and Council Member Oachs suggested keeping the tax rate low where possible; Carlson also proposed scaling down the Public Works project by reducing square footage so it could be expanded later. Council Member Peterson urged caution about deferring maintenance, saying that failure to maintain infrastructure can lead to larger repair or replacement costs in the future. Finance Director Ryan reminded the council that the city had reduced its levy between 2013 and 2023 and did not budget sufficiently for maintenance, which contributed to current funding pressures.
The council took no formal vote on the levy at the work session. Council Member Steiner moved and Council Member Whitlock seconded a motion to adjourn; the session ended at 6:55 p.m.
Next steps: staff will continue work on levy options, consult with the bond attorney on sales-tax-eligible items and return with additional information and recommended priorities before formal levy adoption.
