General fund, preliminary levy discussed at session

During their Tuesday, Aug. 19, work session, members of the Waseca City Council were given information regarding the general fund and the city’s potential property tax levy, then offered two options for a possible preliminary levy amount.

 

During the meeting, city manager Carl Sonnenberg referred to financial audits from the past two years which show the city’s general fund balance has been declining. He said the balance, which essentially constitutes the difference between revenues the city retains and receives and the amount it spends, is meant as a sort of “rainy day” fund which will buffer the city’s finances in case of any unanticipated shortfall.

 

As of the most recent audit, the general fund is at about 35 percent of the city’s 2025 $9.5 million budget; ideally, Sonnenberg said, the amount would be closer to 50 percent.

“We’re trying to provide the city council options to provide staff direction on where you want to set the preliminary levy,” said city finance director and human resources manager Alicia Fischer. 

 

Essentially, council members were asked whether they would prefer to support a levy increase of 6.3 percent which would provide about $87,000 toward restoring the general fund, or a smaller levy increase that would include tightened budgets and a less robust restoration.

 

According to information posted on the city’s website, the 2025 city budget included balanced income and expenditures of just over $9.5 million; $3.5 million of that was collected as property taxes.

 

A presentation shared during the work session proposed a total 2026 budget of just under $9,950,000, with property taxes of $4 million.

 

Under state law, agencies which receive a significant portion of their funding from property taxes must set a “preliminary levy” in September, indicating the amount they expect to collect. Once that preliminary amount is shared, the agency can continue refining its budget in order to submit a final levy amount in December. Under the law, the amount of the final levy can be lower than or equal to the preliminary number, but not higher.

 

Councilmember Gary Conrath asked what kind of notification the city would receive if the governor decided to cut the city’s aid. Neither Sonnenberg nor Fischer had a direct answer to that, but Fischer explained the city gets government aid payments twice a year, usually in July and December.

 

In 2026, Fischer reported the city will be receiving state appropriated Local Government Aid (LGA) of about $3.6 million, roughly $10,000 more than in 2025. The formula which determines a city’s LGA, Fischer said, takes population, tax capacity and other variables into account. Fischer’s estimates included a $433,600 increase in total revenues, about 4.6% above 2025. 

 

She went on to reveal the city expects numerous cost increases, some of which are associated with changes in state financial practices and “unfunded mandates,” that is, projects or tasks the city must take on because of new state laws, but without any additional funding from the state. Beginning in 2026, Fischer said the expanded paid leave law will lead to higher costs.

 

Expected increases in insurance rates, including for employee health care benefits, are also a concern. Sonnenberg told council members he has heard double-digit increases to premiums “have been the norm.”

 

Administrators also described a $45,000 increase to the Internet Technology (IT) budget, to more than $267,000. Part of the increase, they explained, is because Pantheon Computers has been engaged to provide services. “IT is not going away,” commented Fischer. “Those costs are going to continue to grow as security risks continue to grow.”

 

Sonnenberg added that IT is a cost risk assessment and that it is highly important to keep up with IT needs, especially within the police department.

 

Under other major departmental costs, county ditch assessments saw $91,568, an increase of what was originally in the budget, according to Fischer. She added, “We never know how much this is going to be.” 

 

After council members asked why the city is paying assessments to the county, Fischer explained the county assesses maintenance fees to land owners in unincorporated areas whose property benefits from a county maintained drainage system. When a county ditch is located within city limits, the city is assessed the entire amount, and has the option of passing the cost along to individual property owners.  

 

The full-time water park manager position was also discussed, as it is currently in a transition period continuing into 2026. For 2025, Fischer explained a vacancy opened in early spring that was staffed with a part-time supervisor for the season. Sonnenberg cautioned there is some risk in staffing a core service with a part-time position. Although a budget savings, the person found this year was a returning lifeguard currently going to college. 

 

“Personnel management at the waterpark is a big deal. I will not open the waterpark if the lifeguard funding does not allow for all of the stations at the waterpark to have a certified lifeguard,” Sonnenberg stated. The waterpark is now closed for the rest of the season.

 

No decisions regarding the funding approach for 2026 were made during the Aug. 19 work session. Discussions are scheduled to continue during a Sept. 2 work session set for 6:30 p.m.

 

The preliminary budget levy must be submitted by mid-September; the final levy will be approved Dec. 16.