2025.12.15 CC Packet - Laserfiche WebLink

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Council Meeting Minutes for December 1, 2025 Page 3 of 5 distributed statewide, with Hugo again receiving none. She explained that distribution was based on statutory factors and that Hugo’s lower tax rate and lack of unmet fiscal need likely contribute to its ineligibility. As a result, the City must rely on property taxes to fund operations and infrastructure. Wobse reported that Hugo’s tax on a median-valued homestead remains $206 below the statewide average. Total taxable market value for Pay 2026 exceeds $3 billion, a 6 percent increase, with the median homestead value rising 3 percent to $408,700. The City continues to follow its flat tax rate policy. The Council previously adopted a preliminary 2026 levy of $13,567,000, a 5.6 percent increase over 2025. She reviewed the major components of the proposed levy, including $990,753 for bonded debt obligations related to street projects, the Public Works facility, and Lions Park. A Street CIP levy of $2,010,000 was recommended to support future roadway improvements without borrowing. Additional recommended levies included $300,000 for equipment replacement, $278,788 for stormwater improvements, $92,000 for the Parks Special Fund, and $32,728 for the Fire Relief Pension Fund. The City’s per capita debt remains well below the statewide average. The 2026 General Fund budget supports day-to-day City operations and includes funding for 27 full-time positions and two vacant positions to be filled as needed. Wobse reviewed the implementation of the State of Minnesota Paid Leave Program effective January 1, 2026, and the City’s selection of an equivalent private plan. A 4.44 percent salary matrix adjustment was recommended, consisting of a 3 percent cost-of-living adjustment, a 1 percent market adjustment, and a 0.44 percent premium offset for paid leave costs. Step increases for 10 employees were also included. Health insurance premiums will increase 14.95 percent for 2026, with no deductible changes. The budget also includes funding for new vision insurance for full- time employees. Wobse reported that one-time Public Safety Aid funds continue to support the cost of the additional deputy approved in 2024. The total General Fund budget increase for 2026 is $749,500, reflecting wage and benefit increases, inflationary costs, the 2050 Comprehensive Plan update, roadway maintenance programming, replacement of the City’s accounting software, and new permitting and planning software. Approximately 91 percent of General Fund revenues continue to be funded by property taxes. Wobse reviewed fiscal disparities, noting that Hugo will receive $1,124,330 in 2026, covering more than 8 percent of the total levy. Based on County calculations, the City’s tax rate will remain stable, and the median-valued homestead was projected to see a City tax increase of $43. It was noted that Hugo does not impose additional service fees or charges on residents. She also reminded the Council that the City was only one of several taxing jurisdictions reflected on a resident’s property tax statement. Wobse also reviewed available State property tax relief programs for qualifying residents. She concluded her presentation by saying that the City remains in a strong financial position while maintaining its infrastructure commitments. She recommended Council open the public hearing and consider adoption of the final budget and tax levy following public comment.