In a recent meeting held by the City of Duluth, officials discussed the proposed maximum property tax levy for 2026 and the implications of the city's budget. The meeting highlighted the interconnectedness of the property tax levy and the budget, emphasizing the need for careful planning as the city faces projected deficits in the coming years.

Mayor Emily Larson presented a detailed overview of the proposed 2.7% property tax levy increase, which is tied to the Consumer Price Index (CPI) for the year ending July 2025. This increase is seen as a necessary adjustment to account for inflation and rising costs associated with city services. The mayor noted that the city has not raised the levy in the previous year, opting for a 0% increase, which required the city to absorb rising costs without additional revenue.

A significant portion of the discussion focused on the distribution of property tax dollars in Duluth. Mayor Larson clarified that only 27% of property taxes collected go to the city, with the majority allocated to St. Louis County and local school districts. This breakdown is crucial for residents to understand, as many mistakenly believe that all property tax revenue supports city services.

The mayor also addressed the challenges posed by rising salaries and benefits for city employees, which account for a substantial part of the budget. With seven collective bargaining units representing city workers, salary increases are expected to continue, contributing to the projected deficits for 2026 and beyond. The city is navigating a competitive employment market, making it essential to invest in its workforce.

In light of these financial pressures, the city is exploring a combination of new revenue sources and expense reductions to maintain service levels without imposing an unsustainable tax burden on residents. The proposed levy increase, along with capturing 1.4% of new growth in the tax base, aims to generate approximately $3.8 million in additional revenue.

The meeting concluded with a call for community understanding regarding the necessity of the proposed tax increase. Mayor Larson emphasized that capturing new growth does not inherently raise property taxes for residents, as it allows the city to maintain and enhance services in the face of rising costs.

As the city prepares to finalize its budget by December, the discussions from this meeting will play a critical role in shaping Duluth's financial strategy for the upcoming year. The proposed levy increase reflects a balancing act between fiscal responsibility and the need to support essential city services, ensuring that Duluth remains a vibrant community for its residents.