NEW ULM–Following Tuesday’s public hearing on New Ulm’s 2025 city budget, the city is considering a 5.23% tax increase over last year.

In September, the city set the 2025 preliminary levy at $10.7 million, which represents a 7.68% increase from 2024. Once the preliminary levy is set, it cannot be increased, but it can be reduced before the final budget approval.

During the public hearing, City Finance Director Nicole Jorgensen informed the city council staff was able to cut from the budget and reduce the levy to $10.4 million a 5.23% increase. Jorgensen said this reduction was made by removing $157,842 from wages and $78,425 from property and work comp insurance.

The city sill has options for further reducing the levy. Jorgensen highlighted a $120,000 expense related to a Broadway Corridor Study. The city initially budgeted $120,000 for the study with the understanding the state was paying another $120,000 for the full study. However, the state deemed the study would cost too much after receiving estimate and pulled the project from the schedule.

Since the corridor study was not happening in 2025, Jorgensen said the city had the option of pulling the $120,000 contribution from the budget all together. By cutting this expense from the budget, the tax levy would drop to a 4.02% increase.

The council was reluctant to keep the $120,000 expense in the budget without knowing if the corridor study would ever happen.

Councilor David Christian said if MnDOT dropped the project for expense, the city should scratch the $120,000 as well. Later in the hearing it was decided to moved the $120,000 to another project.

The Street Department is preparing to build a new storage building for $200,000. The city had budgeted $100,000 for 2025 with plans to budget another $100,000 in 2026.

Public Works Superintendent Jeff Hoffmann suggested $120,000 be taken from the corridor study and moved to the storage building fund to build it in 2025 rather than wait until 2026.

Mayor Kathleen Backer favored the idea of moving the corridor funds over to the storage building and building and completing the project sooner.

“I would suggest putting the money in for that building and taking care of it,” Backer said.

Councilor Larry Mack said they will need the storage building and the cost of construction would not get any cheaper. He suggested leaving the $120,000 in for the storage building and push forward with construction in 2025.

The council agreed by consensus to keep moving the $120,000 to the building storage fund. With this transfer, the levy increase remains at 5.23%.

Backer was comfortable with a 5.23% tax increase. It was estimated that the average household would see a $70 increase in property taxes.

“We’re still not competing to be at the highest in the state,” Backer said.

The council closed the public hearing and approved the changes to the preliminary budget. The council will make the final levy approval during the Tuesday, Dec. 17 city council meeting. City staff has the flexibility to make minor changes to the budget before the final approval.