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Council examines 2025 budget as street project and utility costs push levy higher
Summary
At a workshop, council reviewed the 2025 draft budget and a proposed roughly $3.9 million bond for street improvements that staff said could add about $136,000 annually to the general levy; staff also highlighted limited new tax capacity and constrained franchise-fee revenue earmarked for streets.
The City Council met at 5:30 p.m. for a workshop to review the proposed 2025 budget, where staff said a major street reconstruction project and ongoing capital needs will push the tax levy higher.
The Administrator told the council that franchise fees collected through Xcel Energy are "100% pass through fees" recorded as revenue and restricted to the streets capital improvement program, and that they cannot be used for other purposes. She said the city has little new tax capacity because property values have risen without commensurate new construction, leaving limited room for additional levy growth.
Finance staff summarized the city's debt profile and said the administration expects to issue roughly $3.9 million for the 2025 street improvements. That borrowing would be structured to keep payments level, but staff warned the council the first large principal payment will cause the levy to rise when the project finishes and payments begin.
"We're looking at issuing another multi‑million debt — I think it's 3.9 is what's estimated here," the Administrator said while reviewing the payment schedule and shared-cost assumptions.
Staff estimated an average of $136,000 more annually would be needed from the general tax levy to cover the street project. Council members asked for clarity on how assessments, enterprise charges and the general levy would share costs and on the timing for when levy impacts would materialize.
The workshop also reviewed capital expenditures that drive levy pressure, including general-fund equipment and fire-related CIP items. Staff identified several levers to reduce the levy, such as deferring nonessential CIP purchases, stretching vehicle replacement schedules, or using alternate funding sources and grants.
Council directed staff to return with refined options, noting that any preliminary levy level set in September can be reduced before the final certification in December but cannot increase after the preliminary amount is mailed.
The council took no final votes on the budget at the workshop; staff said a preliminary budget, additional public comment and a later public hearing will precede final adoption.
