Shorewood reviews 2026 personnel, fee and levy projections; council asks staff to identify top 'heavy-hitter' fees

Shorewood Mayor Janifer Labadie convened a July 28 work session where Finance Director Schmuck presented the third budget work session focused on personnel costs, user fees and franchise fees as staff prepares the 2026 budget.

Schmuck said updates to preliminary valuation numbers and a revision from SLMPD allowed staff to reduce a previously discussed levy increase from 10.51% to 9.72%. She told the Council that public safety–related items alone account for a 4.88% levy increase, representing more than half of the projected increase.

The Council was briefed on the proposed timing for the Master Fee Schedule: staff will present the draft to the Planning Commission and then to the Council with a goal of adoption by Sept. 8, 2025, so any changes can be communicated before fees take effect Jan. 1, 2026. Schmuck emphasized the fee schedule is intended to reimburse the City for costs, not to be a large new revenue source.

During questions, Councilmember Sanschagrin asked whether the stated $1,200 sewer connection fee covers City costs; Schmuck said neither water nor sewer connection fees fully cover the City’s costs and recommended adding fee corrections to a future discussion. She noted some line items in the fee schedule have not been updated since the 1980s.

Councilmember DiGruttolo pressed staff for more granular cost information to evaluate whether contracting for engineering services or hiring an in‑house engineer is preferable. Finance Director Schmuck said $145,000 is currently budgeted for engineering under contractual services and that project-specific engineering fees are billed to project escrows. City Administrator Nevinski estimated hiring a full‑time engineer (salary plus benefits/overhead) could increase costs by roughly $40,000–$50,000 over the current contractual services budget.

Schmuck also outlined anticipated benefit and insurance cost pressures: a State‑mandated paid family and medical leave premium of 0.88% and an estimated 18–20% health insurance increase next year (an estimate provided by the City’s broker, Gallagher). City Clerk/HR Director Thone said the projected increase is consistent with what other jurisdictions in the State are seeing.

Schmuck described the City’s existing low‑income water and sewer reduced‑rate program (eligibility uses Hennepin County benchmarks) and said three households currently use the reduced rate. Councilmembers asked about staff time to administer the program and about options for targeted relief for seniors and residents on fixed incomes.

Councilmembers asked staff to identify the top five to ten “heavy‑hitter” fees that could be adjusted to reduce levy pressure without unduly burdening residents. Schmuck cautioned against relying on fee increases as the primary levy reduction tool but agreed staff would return with a prioritized list and impact estimates. The Council also heard there have been no public signups during staff office hours for budget questions; staff outlined additional public engagement opportunities.

Next steps: the Council will discuss the General Fund at the next budget work session, and staff will return with refined fee‑impact analyses and the Master Fee Schedule timeline that targets Planning Commission review and a Sept. 8 Council hearing.