6 days ago
City Council begins 2026 budget process
Jun. 3—During its work session Monday night, the Austin City Council took the first steps toward its 2026 budget with Director of Administrative Services Tom Dankert laying out the timeline for the process as well as a request for direction from the council on where best to focus their efforts.
While nothing definitive is decided in these very early steps, Dankert did lay out a trio of questions for council to consider, which include staffing levels, fund balance usage and the 2026 tax levy.
Pertaining to the first question, the city is looking at an estimated increase in employee investment of a little over $1.185 million and includes wages and benefits, though Dankert in his presentation pointed out that the estimate does not include changes due to Compensation and Classification re-evaluations.
He also pointed out that all eight of the city's bargaining unit contracts will expire on Dec. 31.
Point two is asking council members to keep in mind its staffing as it pertains to General Fund expenditures.
2024 expenditures accounted for 49% or just over $10.4 million, which falls just outside of the city's internal police of 42-48% of expenditures, but the Minnesota Office of State Auditor advises cities to stay within the 35-50% range.
Putting this into context, new staff would require permanent funding which would have an impact on the budget and could create issues if that funding isn't there.
Finally, the third question brought into play three areas that could have impacts one way or the other regarding the 2026 tax levy.
The first is a spot of good news in that the Flats on 21 apartment complex no longer has access to tax abatements after it expires this year, which will add $48,000 of new tax base to the city books.
However, at the same time the city — like every other governmental entity — will have to consider the impacts of inflationary costs regarding things like materials, vehicles, utilities and more.
Further complicating the process is that the State Legislature has thus far failed to clear its own budget, bringing into play a likely special section to get it sorted out. Further adding to this is that one version of the state's budget included a possible reduction in Local Government Aid of approximately $300,000.
This will impart a level of uncertainty in the City Council's work as any work done between now and the finalization of the budget could be impacted depending on what they do at the state level.
Even though the council didn't make any concrete recommendations regarding the budget Monday night, it did hold a discussion and vote on the possibility of creating a budget committee that Council Member Jason Baskin argued could help the council stay on top of the process throughout in a timely fashion.
Ultimately, it failed by a vote of 4-2 (Baskin had to leave before the vote) with some members fearing the optics of doing work behind closed doors, even though ideas would still be brought to regular council meetings for public conversation as the whole council.
Council Members Mike Postma and Jeff Austin voted in favor of it while Rebecca Waller, Paul Fischer, Oballa Oballa and Laura Helle voted against.
Still, the conversation did prompt the idea of holding more council meetings during the process that would maintain the spirit of what Baskin proposed.
As for the timeline itself, department heads will receive budget documents and direction by June 16 and are expected to return those documents by July 11.
Further budget refinement will take place with the council following that with a goal of setting a proposed tax levy and preliminary budget at the Sept. 15 meeting. State law requires these figures to be approved by Sept. 30.
The Truth in Taxation Hearing will take place sometime between Nov. 25 and Dec. 12 with the final adoption slated for Dec. 15.
