NEW ULM — New Ulm’s 2024 city budget was set at a maximum increase of 5.78% at the City Council meeting Tuesday.

Next year’s budget was approved at $27,410,217. The maximum tax levy was set at $9,951,454. Last year’s final budget was $23,678,036, with a maximum tax levy of $9,407,486. This is a levy increase of $543,968 or 5.78% from last year. The levy can go down from this point, but cannot be increased. At this time last year, the maximum levy increase was set at 12.49%.

Jorgensen compared this maximum levy increase to those set by Albert Lea, Owatonna, St. Peter, Fairbault, Marshall, Hutchinson, North Mankato, and Worthington. New Ulm has the lowest set levy increase, with Albert Lea coming in a close second at 6%. Some cities, like Worthington, are dealing with tax levy increases over 15%.

A notable decrease is in the city tax rate, which has been set at 69.25%. This is a 6.82% decrease from last year and represents a trend of sharp decline. From 2014-2022, the tax rate stayed between 79-83%, but 2023 saw the number decrease from 82-76%. Finance Director Nicole Jorgensen said the city’s tax capacity had a measurable impact on this number.

“The tax capacity increased tremendously again at 16%,” she said “This is almost equal to last year’s [increase’. That had a significant impact on the tax rate. Our tax rate will go 6.82 percentage points down so we’re just below 70%. This is lower than it’s been since 2008. That’s a huge decrease.”

While the tax rate decrease helps, Jorgensen said most people will still see a $9-200 increase in their state taxes depending on their property values.

While the tax rate is seeing a sharp decrease, local government aid and interest rates have gone up significantly. The city will be receiving $533,000 next year, while total interest cost has increased to $214,000. Jorgensen said the interest rates have gone up for everyone in the current market. The city’s debt levy has decreased to $147,571. Jorgensen said this is due to the interest the levy is earning and debts paid off by the city in the past few years.

Jorgensen discussed ways to potentially cut the levy down further when the issue is discussed in December. She said it is possible to cut the levy down all the way to only a 1.27% increase. This would cut the tax rate decrease from 6.82% to 9.79%. This would be done by using funds the city currently has for projects and assessments instead of raising the levy to raise the money. However, Jorgensen cautioned against going lower because it will cause an increase in the 2025 levy.

“We know in 2025 we’re going to have significant wage increases and significant health insurance costs,” she said. “Those alone, when I played with some of the future estimates, [will bring huge changes]. If we go with the 5.78% next year we’ll be starting at 9%, if not a little higher. If we go down to 1.27% we’re looking at a 14% or more increase to start next year.”

City Councilman Les Schultz asked what the intent is behind adding a new maintenance position. The position is included in the Park and Rec fund request and will cost $95,000. Park and Rec Director Joey Schugel said the added position is needed due to a depleted part-time workforce.

“That would be a parks maintenance primary position,” he said. “To continue to enhance our parks and shift over during the winter months. Maintenance and snow plowing and everything we need has seen a decrease in seasonal positions and seasonal help. This has put us at a disadvantage with our full time positions being able to keep up.”

Jorgensen reminded Schultz the $95,000 is not just the salary, but the benefits as well. Public hearings will be held December 5 and 12 at 6 p.m. to consider the budget, after which the final levy increase will be set.