NEW ULM – New Ulm is looking at a potential 9.79% levy increase in 2026.

At an Aug. 19 work session, the New Ulm City Council reviewed the budget for the upcoming year. New Ulm Finance Director Nicole Jorgensen said the city was initially looking at a 17.9% increase, but through the use of reserve funds, the budget was reduced to a 9.79% increase.

Jorgensen said some of the contribution to sinking funds were reduced. The City Facility fund was cut from $750,000 to $400,000.

Jorgensen said the contribution to the sinking fund for city facilities is still higher than normal, but multiple larger projects are coming up within the next year.

Some of the increases were out of city control. Health insurance saw a 25% increase. The city managed to cut it to a 22.7% increase with hopes to reduce it even more.

“We’re hoping to get it a little lower, around around to the18 or 19% mark,” Jorgensen said.

The city will also need to set aside funds for Minnesota Paid Leave. The Minnesota Paid Leave law is partially funded through a 0.88% premium on wages. As the employer, the city is expected to cover 0.44% of the premium. The city estimates this will cost around $45,000 based on $10 million in annual wages.

The city is hosting the Coalition of Greater Minnesota Cities (CGMC) Conference in 2026. The cost to host the conference is around $10,000. City Manager Chris Dalton said this is a place holder, the cost may be lower but they will not know until December.

The city has another $13,000 on the budget for Emerald Ash Borer removal. The city engineer said the city had under 640 ash trees to remove. Staff was seeking a DNR grant to cover the cost of the removal.

Councilor David Christian asked if the city’s tax capacity was expected to increase next for the next year.

Jorgensen said they would not know if there is an increase until later in the year. If there is no tax capacity increase, New Ulm residents would see a 7.17% tax rate change. If tax capacity increase by 2%, the tax rate change will be 5.38%.

Councilor Tom Schmitz reminded the public that once a preliminary budget levy was set it could not be increased, but could be decreased.

Christian said he expected the county and school levy to increase this year, but acknowledged the current budget was fairly bare-bones.

“Don’t look for it to go down much,” Christian said. “We already saved you 7%.”

Council President Andrea Boettger said it was important to make sure they maintained and build up reserves because Local Government Aid (LGA) was never guaranteed. It was increased for this year, but she said LGA was an easy thing for the state to cut during budget times.

Mayor Kathleen Backer thanked the city staff for their work on the budget. She said one of the cuts from the budget was a trip to Germany by city officials. This trip was intended as reciprocal after a delegation from New Ulm’s Sister City visited two years ago.

Backer said putting the trip off until the budget looked better was wise decision.

As this was a work session, the council made no official vote. They are expected to set a preliminary tax levy in September.