NEW ULM – The City of New Ulm is currently reviewing a preliminary budget of $28.8 million for 2026, which includes a $11.3 million preliminary property tax levy.

This represents an 8.16% increase in the tax levy from last year. This is a slight decrease from the 9.79% preliminary levy estimate from August.

Before approving the preliminary budget and levy, City Finance Director Nicole Jorgensen provided a breakdown of next year’s budget.

Jorgensen said the city departments submitted their budgets in May, which she said were relatively tight. Going into budgeting, the city was aware, due to inflation and other mandates, the city was looking at a higher tax levy increase compare to previous years.

One of the highest increases to the budget was health insurance costs. Health insurance increased by $290,000. This represents a 2.77% levy increase in 2026.

The Minnesota Paid Leave law will go into effect Jan. 2026, which is partially funded through a 0.88% premium on employee wages. As the employer, the city is expected to cover the other half of the premium.

Jorgensen said since the city is going through a private plan, the premium on wages for city workers is 0.78% instead of 0.88%. The city’s contribution for MN Paid Leave will be $43,740, a slight decrease from the $45,000 estimated in August.

The city is hosting the Coalition of Greater Minnesota Cities (CGMC) Conference in 2026. The cost to host the conference is around $10,000 and another 0.1% increase to the levy.

Jorgensen said there is a possibility the city could see additional revenues from the sale of naming rights for Park and Recreation facilities. If a naming rights contract were approved for a Parks facility, this could offset some of the department’s budget in 2026.

The city will see a $12,000 increase to Local Government Aid (LGA), but this is small compared to some of the additional expenses.

Jorgensen ended the presentation with an estimate of what the average tax payer could expect to pay based on an 8.16% levy increase. A person with a $200,000 home could expect to see a $60.41 increase in their property tax.

The council was comfortable with setting the tax levy at 8.16%. Councilor David Christian said while the levy was at 8.16%, the tax rate changed 3.02% and he was comfortable with 3% change.

Councilor Tom Schmitz said he was also comfortable with this preliminary number. He also noted that there were still three months left in the year for the city to further reduce its budget and levy.

By law, once the city sets the preliminary budget and levy, it cannot be increased before the end of the year, but it could be further reduced.

Schmitz made the motion to set the 2026 preliminary budget at $28.8 million with $11.3 million property tax levy. The motion was seconded by Councilor Eric Warmka. It was unanimously approved by the council.

Mayor Kathleen Backer thanked city staff for helping negotiate the preliminary budget.

“I think the increase is important to look at, but it is much less than I thought it would be,” she said.

The council will hold its truth and taxation public hearing at 6 p.m. Tuesday, Dec. 2, with a continuation of the hearing, if needed, on Tuesday, Dec. 19, before approving the final 2026 budget.