NU city council previews 2027 preliminary budget

NEW ULM -- The New Ulm City Council previewed a revised 2027 preliminary budget Tuesday.

Finance Director Nicole Jorgensen presented the draft and said the preliminary budget will be brought forward for formal approval in September. The council will set the preliminary levy, which is the maximum amount the city can collect from property taxes. State law allows the council to lower that amount before final approval in December, but not raise it.

With the current budgets numbers, a home valued at $200,000 could see an annual tax increase between $75 and $154, depending on final tax capacity figures. 

That amounts to a monthly impact of $7 to $12.

Tax capacity measures the total taxable value of all property in the city. When tax capacity rises, the overall levy cost is distributed across a larger financial base. 

Jorgensen said the city would need a 10% tax capacity increase to keep the tax rate completely unchanged, though that level of growth is not projected this year.

Operational expenses account for most of the budget shift, increasing by 6.8% due to wage adjustments set in union contracts and a 10% hike in health insurance costs. 

Jorgensen said those wage increases were already negotiated and set in existing union contracts.

“Most of the change comes from day-to-day costs to run the city,” Jorgensen said.

Those expenses were partially offset by an almost 10% reduction in workers’ compensation costs following favorable claims experience. 

Jorgensen said the city’s good safety record and lower number of claims helped drive that cost down. The debt portion of the budget is increasing by about $336,000 after two decades of declines as older bonds retire and newer obligations remain.

The draft also incorporates an adjusted Economic Development Authority (EDA) maximum levy calculation. 

Research by Jorgensen established the actual maximum at $255,117 rather than the previously assumed $117,000. The draft includes the full $138,000 correction. 

The EDA uses its levy to support business loans and development programs, and the authority continues to operate at a deficit using fund balance reserves while its loan programs work toward self-sustainability.

Capital allocations through Fund 290 total $1.1 million for the Hermann Monument, municipal facilities, the recreation center, police equipment, fire trucks, and playground replacements. 

Fund 290 is the city’s capital improvement fund used for large, one-time purchases and facility improvements.

City contributions to local communities total $133,000, including $22,500 for the Brown County Historical Society, $17,500 for Hermann Monument Society fireworks, $15,000 for the municipal band, $10,000 for Heart of New Ulm, and $5,000 for the New Ulm Business and Retail Association.

The city also realized approximately $1 million in savings by reducing its reliance on outside firms for engineering and airport consulting. 

Additionally, New Ulm will receive $19,000 more in state Local Government Aid and $95,000 more from the Public Utilities Commission in lieu of property taxes. 

That payment is made by the city-owned utilities instead of property taxes because the utilities are exempt from paying property tax.

“The numbers are better than we expected a month ago,” City Council President Andrea Boettger said.

Councilors thanked staff and department heads for their work. 

The council will hold its next meeting at 4:30 p.m. Sept. 1 in City Hall Council Chambers.