HomeMy WebLinkAbout09(A) - Resolution Approving Preliminary 2026 City Budgets and Certifying Preliminary 2026 City of Prior Lake Property Tax Levy to Scott County Department of Taxation Report
ITEM: 9A
CITY COUNCIL AGENDA REPORT
MEETING DATE: September 23, 2025
PREPARED BY: Jason Etter and Nicole Klekner
PRESENTED BY: Nicole Klekner, Interim Finance Director
AGENDA ITEM: Resolution Approving Preliminary 2026 City Budgets and
Certifying Preliminary 2026 City of Prior Lake Property Tax Levy to
Scott County Department of Taxation
RECOMMENDED ACTION:
Adopt the preliminary 2026 budgets and set the preliminary tax levy for payable 2026 for the
City of Prior Lake and the Economic Development Authority. The preliminary tax levy
establishes the maximum that the City can levy against properties in 2026.
BACKGROUND:
Introduction
State statutes require that each taxing authority adopt a preliminary budget and certify a
preliminary tax levy for payable 2026 to the County on or before September 30, 2025. The
preliminary tax levy establishes the maximum that the City can levy against properties in 2026.
The City’s tax levy is used (together with the preliminary levies of other taxing entities) to assemble
the parcel-specific truth in taxation notices for mailed distribution in November prior to the public
budget meetings in December.
At the meeting at which the City Council adopts a preliminary budget and preliminary tax levy
(September 23), the Council must announce the date, time and place of the Council meeting and
Public Hearing at which the final 2026 budget and levy will be discussed.
That meeting is scheduled for Tuesday, December 9 at 7 p.m. in the Prior Lake City Council
Chambers.
This information must also be included in the meeting minutes.
Budget Overview
A budget overview is attached to this agenda report as Attachment 3 and reflects proposed 2026
budget and tax levy amounts for the following funds:
General Fund
Debt Service Funds
Cable Fund
Capital Park Fund
Revolving Equipment Fund
Revolving Park Equipment Fund
Permanent Improvement Revolving Fund
City of Prior Lake | 4646 Dakota Street SE | Prior Lake MN 55372
Item 9A
Page | 2
Facilities Management Fund
Economic Development Authority
Water Fund
Sewer Fund
Water Quality Fund
Attachment 5 provides revenue and expenditure detail by fund.
FINANCIAL IMPACT:
The proposed budgets reflect additional resources needed for the following areas:
Community Growth
Proposed personnel funding for a Network Administrator, Police Sergeant, and Police
Records Specialist.
Unfunded mandates (MN paid leave program, election absentee voting equipment, ADA
compliance for website)
Reduction in the rate of residential development (Prior Lake is still experiencing
community growth, but at a slower rate than the previous several years is anticipated.)
Commodities – inflationary increases
City Proposed Tax Levy
The total proposed city tax levy is $21,337,133. This is an increase of $1,481,723 (7.46%) from
the prior year tax levy. The components of the proposed tax levy change based on the 2026
preliminary budgets are summarized on the tax levy change bar chart below and on Attachment
4.
Item 9A
Page | 3
New Personnel Funding
The City’s current full-time equivalent (FTE) headcount is 122.02. It is proposed to increase by 3
FTE to 125.02 in 2026.
The 2026 budget includes new tax levy funding of $345k for a new Network Administrator
position (July 2026 start), and the addition of a Police Sergeant and a Police Records
Specialist.
Capital Improvement Program (CIP) Funding
The Council has incrementally increased the tax levy to support the long-term plans of the Capital
Improvement Program with the goal of building cash reserves to minimize future debt and to meet
our capital replacement needs. Previous funding levels have not been enough to maintain our
capital replacement needs.
Mandatory Items Funding:
Staffing:
The city has labor agreements with three unions that will be negotiated this fall for 2026.
The budget includes proposed cost of living adjustments, step increases and mandatory
City payroll taxes and Public Employees Retirement Association (PERA) contribution
increases. This also includes the financial impact of the compensation study for the Police
Department completed in 2025.
o COLA/STEPS: $555k
o PERA/SS/FICA: $83k
Health and Dental Insurance estimated expenditure increase of $203k. The proposed
budget reflects an 8.8% increase in the health insurance premiums and a 7.88% increase
in dental insurance premiums. The city and employee contribution for health and dental
insurance will also be part of the labor agreements negotiated this fall for 2026.
Non-Tax Revenue Shortfall:
Intergovernmental revenue is increasing by $321k compared to 2025. This includes:
o $131k increase in township fire/rescue aid based on the fire agreement
o $125k increase in Local Intergovernmental Aid with Shakopee Mdewakanton
Sioux Community (SMSC)
o $76k increase in state road and bridge aid
o $60k increase in police state aid
o Partially offset by decrease in capital grants of $106k
Increase of $65k for City Contracted Services based on 2024 revenue plus increased
Police contracted rate due to 2025 compensation study.
Increase of $35k for project admin/engineering fees based on the proposed projects.
Increase in Transfer-In as a funding source of $53k. This is based on operating transfers
from the utility funds.
Increase in interest earnings of $16k. Budget reflects anticipated earnings on investments.
Revenue from residential building permits/fees budget is $117k less than the 2025 budget.
The City collects building permits and plan check revenue on new residential and
townhome units built. Prior Lake is still growing, but the 2026 estimate for new construction
units is 50 single family/0 townhomes (50 total) which generates less revenue than the
2025 budget mix of 60 single family/20 townhomes (80 total).
Franchise fee revenue decrease of $27k.
Item 9A
Page | 4
Current Expenditures/Capital Outlay/Transfers Out:
The 2026 current expenditure/capital outlay/transfers out budget is a decrease of $215k
compared to 2025.
Supplies:
$24k decrease in funding for supplies.
o This includes a $54k decrease for fuel and small equipment.
o There are offsetting increases of $29k in operating supplies, all repairs & maintenance
supplies, uniforms/PPE, etc.
Maintenance agreements:
$56k increase in funding largely due to maintenance agreements including general,
building and equipment maintenance due to increases in fertilizer & weed spraying, trees
and vegetation, contracted mowing and graffiti removal services and new development
sealcoat.
Professional Services:
$197k net decrease in professional services primarily to decreases in Engineering, Human
Resources, and Parks professional services needs compared to 2025.
Other Services and Charges:
$163k increase in funding for other services and charges:
o This includes a $92k increase for software service contracts primarily due to $40k
budgeted for ADA compliant website, $24k for new Police software, $18k for new
IT needs and $11k for new Recreation software implementation
o $35k increase in utilities (electric/gas)
o $16k increase in memberships/subscriptions, primarily for Fire, Administration and
Police
Capital Outlay:
2026 costs are estimated to be $74k more than the prior year. 2026 includes a high-speed
ballot scanner recommended by Scott County ($30k) and IT increase of $80k to replace
SAN and servers, and switch replacement.
Transfers Out:
2026 transfers out to other funds are estimated to be $287k less than the prior year.
Other Levy Impacts:
$750k change in use of reserves due to 2025 budget amendments.
$50k increase in debt service compared to 2025.
EDA Proposed Tax Levy
The EDA budget includes funding for wages, property acquisition, and property taxes/
maintenance costs for EDA owned properties. The proposed budget does not include a funding
increase. The preliminary EDA tax levy remains at $405,000.
Estimated Tax Rates
The following table shows the estimated tax rates based on the preliminary budgets.
The city tax rate is estimated to increase 3.0% from 30.5% to 31.4%. The city tax rate
dropped significantly in 2023 (-7.7%) due to a citywide overall market valuation increase
of 20%. The estimated citywide market valuation increase for 2024-2026 normalized and
is 3.6%, 4.2% and 4.6%, respectively.
CITY OF PRIOR LAKE
PROPERTY TAX PROJECTION SUMMARY - CITY
Adopted Proposed
Budget 2025Budget 2026
TAX LEVIES - CITY
19,855,410 21,337,132
TOTAL $ CHANGE IN TAX LEVIES
1,155,263 1,481,722
TOTAL % CHANGE IN TAX LEVIES
6.18%7.46%
CITY TAX CAPACITY TAX RATE
30.5%31.4%
Annual % Change -city only excludes EDA0.74%3.00%
CITY MARKET VALUE TAX RATE
0.00464%0.00450%
Item 9A
Annual % Change1.41%-3.00%
Page | 5
PROPERTY TAX PROJECTION SUMMARY - EDA
Adopted Proposed
The City market value referendum rate for financing the construction of Fire Station #2 is
Budget 2025Budget 2026
TAX LEVY - EDA
405,000 405,000
estimated to decrease 3.0%. The decrease is driven by the annual debt service payment
TOTAL $ CHANGE IN TAX LEVIES
15,000 -
TOTAL % CHANGE IN TAX LEVIES
3.9%0.0%
EDA TAX RATE
0.63%0.60%
schedule of the bond issue.
Annual % Change-0.28%-4.56%
The EDA tax rate is estimated to decrease from .63% to .60% (4.56% reduction). The
decrease is primarily due to the city’s 5.1% preliminary increase in tax capacity.
Overall Residential Impact:
The table below groups the homeowner valuation change for all properties in the City.
Based on the proposed City tax levy and the estimated market valuations provided by Scott
County, 52% of the homes in Prior Lake will see a property tax rate increase of between 0.01%-
5.0%.
RESIDENTIAL IMPACTS
Median $433,600$600,000$1,000,000
% NetNetNetNetNetNet
# of
% EMV Value Range
affected ofInc/DecDifferenceInc/DecDifferenceInc/DecDifference
Inc/DecPropertiesTotal25 vs 26% Change25 vs 26% Change25 vs 26% Change
+15.01+%711%$ 26420.0%$ 41421.4%$ 69720.1%
+10.01-15.00%491%$ 22617.2%$ 35418.3%$ 59817.2%
+5.01-10.00%1,70718%$ 15111.5%$ 23512.2%$ 40011.5%
+0.01-5.00%5,05552%$ 765.8%$ 1166.0%$ 2015.8%
No Change6306%$ 382.9%$ 562.9%$ 1022.9%
-0.01-5.00%2,22323%$ 10.1%$ (3) -0.2%$ 2 0.1%
-5.01 - 10.00%80%$ (74)-5.6%$ (122)-6.3%$ (196)-5.6%
-10.00 - 15.00%10%$ (150)-11.3%$ (242)-12.5%$ (395)-11.4%
-15.01% +70%$ (187)-14.2%$ (301)-15.6%$ (494)-14.2%
Item 9A
9,751
100%
Page | 6
For a median valued home of $433,600, the estimated increase in the city portion of taxes is $76.
Of the increase, $36 is funding for public safety and $40 is funding for city operations/services.
Enterprise Funds
Included in Attachment 3 are budget summaries of the three enterprise funds that the City
operates. The proposed rate changes are based on the Council discussion and annual update of
the Capital Improvement Program. An annual rate increase is reflected in the water, sewer and
storm water budgets and will be presented to the Council for approval as part of 2026 fee schedule
adoption at the December 9 Council meeting.
The 2026 budget reflects the utility rates included in the Capital Improvement Program (CIP)
adopted by the Council on August 12, 2025. Staff presented rate increases necessary to fund
operations as well as capital projects identified in the Capital Improvements Plan. The CIP
includes $12.1 million of water projects, $14.5 million of sewer projects, and $5.7 million of water
quality projects planned over the next five years.
Funding for utility funds is achieved through rates charged and/or debt issuance. Council directed
staff to plan for rates that achieve the City’s goals around rates and revenue sufficiency, while
ensuring the necessary funding for operations and capital projects identified in the CIP. To
achieve this, the following rate increases will be necessary for 2026:
2026 Proposed Annual Monthly
FundRate IncreaseImpactImpact
Water3.0%$ 17$ 1
Sewer7.3%$ 45$ 4
Stormwater3.0%$ 5$ 0.4
Combined Total5.0%$ 67$ 6
Item 9A
Page | 7
Water rate increase of 3.0%
Combined sewer rate increase of 7.5% (City Sewer and MCES Sewer)
Stormwater rate increase of 3.0%.
The estimated utility bill combined impact for a medium water user is a 5% increase with an annual
impact of $67 ($5.58 per month) as shown in the table below.
MCES Sewer Rate
It should be noted that City utility bills also include a MCES Fee for Sewer. This fee does not
support City operations or the Capital Improvement Plan, but is a fee collected by the City from
residents to pay the Metropolitan Council’s Environmental Services (MCES) fee for regional
wastewater disposal and treatment. The fee will increase 3.5% for 2026, reflecting the increased
fee that the Metropolitan Council is charging Prior Lake.
The bimonthly 2026 rate increase impact on high, medium, and low volume water users is shown
in the table below.
Water, Sewer & High Volume Medium Volume Low Volume
Stormwater - ProposedCustomer Customer Customer
Gallons Water Billed for
78,000 18,000 8,000
Billing Period
Gallons Sewer Billed for
47,000 12,000 7,000
Billing Period
Stormwater REU1 1 1
2025
Base Fee$ 71.33$ 71.33$ 71.33
Capital Facilities Charge - - -
MCES Fee for Sewer 163.80 41.82 24.40
Tier 1 Volume 69.16 69.16 52.16
Item 9A
Tier 2 Volume 82.99 43.59 -
Tier 3 Volume 107.94 - -
Tier 4 Volume 547.72 - -
Page | 8
Tier 5 Volume - - -
Total Fee$ 1,042.94$ 225.91$ 147.89
2026
Base Fee$ 74.98$ 74.98$ 74.98
Capital Facilities Charge - - -
MCES Fee for Sewer 169.45 43.26 25.24
Tier 1 Volume 73.45 73.45 55.28
Tier 2 Volume 88.14 45.43 -
Tier 3 Volume 114.64 - -
Tier 4 Volume 572.98 - -
Tier 5 Volume - - -
Total Fee$ 1,093.64$ 237.13$ 155.50
% Increase4.9%5.0%5.1%
$ Increase$ 50.70$ 11.22$ 7.61
Annual increase 304.20 67.34 45.64
Budget Metrics and Base tax levy considerations:
The following chart provides base considerations for establishing the 2026 tax levy based on
factors that impact the Prior Lake community:
Growth (New Construction) 1.6%
Wage Growth * 4.3%
Debt Service 0.9%
Unfunded Mandates 0.6%
Total 7.4%
*Used March YTD wage growth of 4.3% instead of inflation rate of 2.4% as 72% of city budget is
personnel costs. The growth of wages surpassed that of inflation for the first time since March 2021
in February of 2023.
$1,000Expected Property Tax Levy/HHProperty Tax Levy/HH Property Tax Levy Per Household Proposed2026202520242023202220212020201920182017 $1,900 $1,850 $1,800 $1,750 $1,700 $1,650 $1,600
$1,550 $1,500 $1,450 $1,400 $1,350 $1,300 $1,250 $1,200 $1,150 $1,100 $1,050
Item 9A
Page | 9
One of the key metrics the City Council targets during the budget process is to “maintain a level
of property taxes on a per household basis which takes into account the cost of inflation and
community growth.”
As mentioned above, the proposed tax levy change is 7.46%.
The following chart illustrates the total property tax levy on a per household basis.
The increase in the property tax levy per household is primarily due to the implementation of full-
time firefighter staffing in 2023 and 2024 and wage inflation above the CPI.
Another key metric the City Council targets is to “maintain a level of General Fund operational
expenditures on a per household basis which considers the cost of inflation and community
growth.”
The following chart illustrates General Fund operating expenditures on a per household basis
from 2017 to the preliminary 2026 budget:
$1,150Operating Expenditures/HHExpected Operating Expenditures/HH Expenditures Per HouseholdGeneral Fund Total Operating Proposed2026202520242023202220212020201920182017 $2,400 $2,350
$2,300 $2,250 $2,200 $2,150 $2,100 $2,050 $2,000 $1,950 $1,900 $1,850 $1,800 $1,750 $1,700 $1,650 $1,600 $1,550 $1,500 $1,450 $1,400 $1,350 $1,300 $1,250 $1,200
Item 9A
Page | 10
As reflected in the chart above, the preliminary 2026 operating expenditures per household
continues to be less than the level which reflects the cost of inflation and growth.
ALTERNATIVES:
1. Approve resolutions adopting preliminary budgets and setting maximum levies as set
forth in the resolutions.
2. Approve the resolutions modified to adjust certain expenditures and the programs they
support.
ATTACHMENTS:
1. Resolution 1 - Consider Approval of a Resolution Approving Preliminary 2026 City
Budgets and Certifying Preliminary 2026 City of Prior Lake Property Tax Levy to Scott
County Department of Taxation
2. Resolution 2 - Consider Approval of a Resolution Approving Preliminary 2026 Economic
Development Authority Budget and Certifying Preliminary 2026 Economic Development
Authority Property Tax Levy to Scott County Department of Taxation
3. Budget Overview
4. Components of 2026 Proposed Tax Levy Change
5. Revenue and Expenditure Detail
4646 Dakota Street SE
Prior Lake, MN 55372
RESOLUTION 25-
A RESOLUTION ADOPTING 2026 CITY BUDGETS AND CERTIFYING
PRELIMINARY 2026 CITY OF PRIOR LAKE PROPERTY TAX LEVY
TO SCOTT COUNTY DEPARTMENT OF TAXATION
Motion By: Second By:
WHEREAS, State statute requires that the Prior Lake City Council certify a proposed
property tax levy to the Scott County Department of Taxation; and
WHEREAS, preliminary budget amounts for the City of Prior Lake for calendar year 2026 are
estimated as follows; and
General Fund $ 24,093,139
Debt Service Funds 5,110,160
Cable Fund 3,700
Capital Park Fund 5,600
Revolving Equipment Fund 1,662,600
Revolving Park Equipment Fund 870,000
Permanent Improvement Revolving Fund 1,546,250
Facilities Management Fund 1,293,000
Water Fund 8,389,390
Sewer Fund 6,534,731
Water Quality Fund 1,793,691
Total $ 51,957,809
WHEREAS, the proposed property tax levy for the City of Prior Lake for payable year 2026 is
as follows; and
General Purposes $ 16,267,024
Revolving Equipment Fund 925,000
Revolving Park Equipment Fund 595,000
Permanent Improvement Revolving Fund -
Facilities Management Fund 305,000
Debt Service 3,245,109
Total $ 21,337,133
WHEREAS, the proposed City of Prior Lake property tax levy for the year payable 2026 of
$21,337,133 represents a $1,481,723 or 7.46% increase; and
WHEREAS, the City Council will consider the 2026 General Fund, Debt Service Funds, Cable
Fund, Capital Park Fund, Revolving Equipment Fund, Revolving Park Equipment
Fund, Permanent Improvement Revolving Fund, Facilities Management Fund and
Enterprise Fund Budgets and the Final 2026 Property Tax Levy during its regularly
scheduled council meeting at 7:00 p.m. on Tuesday December 9, 2025 at 4646
Dakota Street SE, Prior Lake 55372 with a continuation (if necessary) at 7:00 p.m.
on December 23, 2025.
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE,
MINNESOTA as follows:
1. The recitals set forth above are incorporated herein.
2. That the proposed tax levy be distributed upon the taxable property in said City for the following
purposes in payable 2026:
Purpose Amount Amount
* General City Purposes 16,267,024
* Revolving Equipment Fund 925,000
* Revolving Park Equipment Fund (Park Equipment & Trail 595,000
Replacement)
* Permanent Improvement Revolving Fund (Street Overlay) -
* Facilities Management Fund 305,000
Debt Service:
th
* F563-G.O. Imp Bonds 2015B (150/13) 610,212
* F565, 566, 567-G.O. Imp Bonds 2016A (Manitou) 67,701
th
* F566-G.O. Imp Bonds 2016A (150/13) 42,840
* F568-G.O. Imp Bonds 2017A (Cates, Balsam, Franklin, Sycamore) 262,629
* F570-G.O. Imp Bonds 2018A (Equip, CIP, Imp, Street Recon) 474,492
* F572-G.O. Imp Bonds 2019A (Street and Capital Improvements) 206,829
* F574-G.O. Imp Bonds 2021A (Street, Equipment, Refunding) 266,234
* F575-G.O. Imp Bonds 2021B (Refunding) 746,813
* F576-G.O. Imp Bonds 2022A (Street and Capital Improvements) 166,748
* F580-G.O. Imp Bonds 2025A (Wilds Pkwy, Martindale/Henning) 134,723
** F318-Fire Station #2 Referendum Bonds ‘06 265,888
Total Debt Service 3,245,109
Total $ 21,337,133
Note: Single starred funds shall be spread over the entire consolidated City of Prior Lake.
Note: Double starred funds represent market value-based referendum taxes and shall be spread
over the entire consolidated City of Prior Lake.
Note: All other bond issues have sufficient fund balances to cover debt requirements.
Passed and adopted by the Prior Lake City Council this 23rd day of September 2025.
VOTE Briggs Braid Churchill Lake Hellier
Aye
☐ ☐ ☐ ☐ ☐
Nay
☐ ☐ ☐ ☐ ☐
Abstain
☐ ☐ ☐ ☐ ☐
Absent
☐ ☐ ☐ ☐ ☐
______________________________
Jason Wedel, City Manager
C:\\Users\\hsimon\\AppData\\Local\\Temp\\Attachment 1 Resolution 1 - Consider Approval of a Resolution Approving Pr_674523\\Attachment 1 Resolution 1 -
Consider Approval of a Resolution Appro.docx 2
4646 Dakota Street SE
Prior Lake, MN 55372
RESOLUTION 25-
A RESOLUTION ADOPTING PROPOSED 2026 ECONOMIC DEVELOPMENT AUTHORITY
BUDGET AND CERTIFYING PRELIMINARY 2026 ECONOMIC DEVELOPMENT AUTHORITY
PROPERTY TAX LEVY TO SCOTT COUNTY DEPARTMENT OF TAXATION
Motion By: Second By:
WHEREAS, State statute requires the Prior Lake City Council to certify a proposed
property tax levy to the Scott County Department of Taxation; and
WHEREAS, State Statute 469.107 subd. 1 provides that a city may, at the request of the
Economic Development Authority, levy a tax in any year for the benefit of the
authority in an amount not to exceed 0.01813 percent of taxable market value;
and
WHEREAS, the maximum allowable EDA property tax levy for payable year 2026 has been
determined to be approximately $1,030,000; and
WHEREAS, the Prior Lake EDA, at its regularly scheduled meeting of July 22, 2025,
authorized a 2026 tax levy for economic development purposes in the amount
of $405,000 and a 2026 budget of $655,548.
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE,
MINNESOTA as follows:
1. The recitals set forth above are incorporated herein.
2. A preliminary tax levy of $405,000 and proposed budget of $655,548 are approved for payable
year 2026.
3. That the proposed Economic Development Authority tax levy be distributed upon the taxable
property in said City for the purposes of economic development in payable 2026.
Passed and adopted by the Prior Lake City Council this 23rd day of September 2025.
VOTE Briggs Braid Churchill Lake Hellier
Aye
☐ ☐ ☐ ☐ ☐
Nay
☐ ☐ ☐ ☐ ☐
Abstain
☐ ☐ ☐ ☐ ☐
Absent
☐ ☐ ☐ ☐ ☐
______________________________
Jason Wedel, City Manager
2024 2025 2025 2026 2026 2026
ACTIVITY COUNCIL ADOPTED AMENDED PROPOSED PROPOSED PROPOSED
DESCRIPTION BUDGET BUDGET BUDGET AMT CHANGE % CHANGE
Fund 101 - GENERAL FUND
Taxes 13,950,491 15,111,220 15,111,220 16,532,912 1,421,692 9.41
Charges for Services 2,055,297 1,795,722 1,795,722 1,853,329 57,607 3.21
Intergovernmental 3,586,574 3,606,584 3,712,834 4,033,388 320,554 8.63
Miscellaneous Revenues 1,155,396 381,300 381,300 424,800 43,500 11.41
Interest (losses) on investments 156,172
Sale of assets 5,086
Transfers in 876,400 615,000 615,000 668,000 53,000 8.62
Licenses and Permits 868,936 550,842 550,842 472,710 (78,132) (14.18)
Fines and Forfeitures 103,766 108,000 108,000 108,000
TOTAL - FUND 101 22,758,118 22,168,668 22,274,918 24,093,139 (1,818,221) (8.16)
DEBT SERVICE FUNDS
Taxes 3,187,883 2,929,190 2,929,190 2,979,221 50,031 1.71
Miscellaneous Revenues 1,894,535 646,814 646,814 575,332 (71,482) (11.05)
Transfers in 968,114 1,256,974 1,256,974 1,305,156 48,182 3.83
TOTAL - DEBT SERVICE FUNDS 6,050,532 4,832,978 4,832,978 4,859,709 26,731 0.55
Fund 210 - CABLE FRANCHISE FUND
Charges for Services 13,368 17,000 17,000 12,000 (5,000) (29.41)
Miscellaneous Revenues 4,525
TOTAL - FUND 210 17,893 17,000 17,000 12,000 5,000 29.41
Fund 225 - CAPITAL PARK FUND
Charges for Services 61,610 332,000 332,000 217,767 (114,233) (34.41)
Intergovernmental 1,000,000 1,000,000 (1,000,000) (100.00)
Miscellaneous Revenues 77,972 43,800 43,800 41,400 (2,400) (5.48)
Interest (losses) on investments (715)
Transfers in 290,000 (290,000) (100.00)
TOTAL - FUND 225 138,867 1,375,800 1,665,800 259,167 1,406,633 84.44
Fund 240 - EDA SPECIAL REVENUE FUND
Taxes 387,197 405,000 405,000 405,000
Charges for Services 27,867 24,588 24,588 26,988 2,400 9.76
Miscellaneous Revenues 16,977 9,800 9,800 11,100 1,300 13.27
TOTAL - FUND 240 432,041 439,388 439,388 443,088 (3,700) (0.84)
Fund 410 - REVOLVING EQUIPMENT FUND
Taxes 796,530 1,025,000 1,025,000 925,000 (100,000) (9.76)
Miscellaneous Revenues 28,574 20,400 20,400 14,000 (6,400) (31.37)
Sale of assets 294,704
Transfers in 400,000 342,166 342,166 (342,166) (100.00)
TOTAL - FUND 410 1,519,808 1,387,566 1,387,566 939,000 448,566 32.33
Fund 430 - REVOLVING PARK EQUIP FUND
Taxes 458,181 535,000 535,000 595,000 60,000 11.21
Intergovernmental 13,672 212,500 212,500
Miscellaneous Revenues 39,872 32,500 32,500 198,200 165,700 509.85
Debt Issued 1,030,000 1,030,000 (1,030,000) (100.00)
TOTAL - FUND 430 511,725 1,597,500 1,597,500 1,005,700 591,800 37.05
Fund 440 - FACILITIES MANAGEMENT FUND
Taxes 204,419 255,000 255,000 305,000 50,000 19.61
Intergovernmental 47,000 47,000 (47,000) (100.00)
Miscellaneous Revenues 57,483 35,800 35,800 28,700 (7,100) (19.83)
Transfers in 24,000 60,000 60,000
Debt Issued 515,000 515,000 1,500,000 985,000 191.26
TOTAL - FUND 440 285,902 852,800 852,800 1,893,700 (1,040,900) (122.06)
From Amended Budget
REVENUES
CITY OF PRIOR LAKE
BUDGET REPORT
2024 2025 2025 2026 2026 2026
ACTIVITY COUNCIL ADOPTED AMENDED PROPOSED PROPOSED PROPOSED
DESCRIPTION BUDGET BUDGET BUDGET AMT CHANGE % CHANGE
From Amended Budget
REVENUES
CITY OF PRIOR LAKE
BUDGET REPORT
Fund 450 - PERMANENT IMPROVEMENT REVOLVING FUND
Charges for Services 1,096,647
Intergovernmental 23,573
Miscellaneous Revenues 1,031,549 346,942 346,942 270,946 (75,996) (21.90)
Transfers in 615,441 300,000 300,000 (300,000) (100.00)
Debt Issued 1,580,000 230,000 230,000
TOTAL - FUND 450 4,347,210 646,942 646,942 500,946 145,996 22.57
Fund 601 - WATER FUND
Charges for Services 6,832,635 5,935,035 5,935,035 5,659,319 (275,716) (4.65)
Intergovernmental 5,437
Miscellaneous Revenues 392,301 196,500 196,500 237,900 41,400 21.07
Transfers in 257,313
Other Financing Sources 16,160
TOTAL - FUND 601 7,503,846 6,131,535 6,131,535 5,897,219 234,316 3.82
Fund 602 - STORM WATER UTILITY
Charges for Services 2,042,656 2,002,272 2,002,272 2,127,213 124,941 6.24
Intergovernmental 38,000
Miscellaneous Revenues 157,143 69,300 69,300 100,100 30,800 44.44
Transfers in 2,395
Other Financing Sources 1,248
Storm Water Charges 300
TOTAL - FUND 602 2,241,742 2,071,572 2,071,572 2,227,313 (155,741) (7.52)
Fund 604 - SEWER FUND
Charges for Services 6,345,492 5,581,444 5,581,444 6,007,314 425,870 7.63
Miscellaneous Revenues 198,855 106,400 106,400 119,500 13,100 12.31
Transfers in 88,032
Other Financing Sources 16,160
TOTAL - FUND 604 6,648,539 5,687,844 5,687,844 6,126,814 (438,970) (7.72)
TOTAL - ALL FUNDS 52,456,223 47,209,593 47,605,843 48,257,795 (598,490) (1.26)
1,048,202 (1.27)
From Original Budget
2024 2025 2025 2026 2026 2026
ACTIVITY COUNCIL ADOPTED AMENDED PROPOSED PROPOSED PROPOSED
ACCOUNT DESCRIPTION BUDGET BUDGET BUDGET AMT CHANGE % CHANGE
Fund 101 - GENERAL FUND
41110.00 MAYOR & COUNCIL 78,524 84,518 84,518 85,270 752 0.89
41130.00 ORDINANCE 8,453 6,000 6,000 6,000
41320.00 ADMINISTRATION 392,321 413,881 413,881 442,044 28,163 6.80
41330.00 BOARDS & COMMISSIONS 7,750 8,150 8,150 8,182 32 0.39
41400.00 CITY CLERK FUNCTIONS 134,302 148,952 152,227 165,311 13,084 8.60
41410.00 ELECTIONS 105,498 27,555 27,555 149,032 121,477 440.85
41520.00 FINANCE 718,056 786,856 791,856 792,430 574 0.07
41540.00 INTERNAL AUDITING 42,019 50,100 50,100 53,400 3,300 6.59
41550.00 ASSESSING 252,942 271,705 271,705 271,620 (85) (0.03)
41610.00 LEGAL 271,394 269,253 269,253 286,112 16,859 6.26
41820.00 HUMAN RESOURCES 358,905 398,039 398,039 400,061 2,022 0.51
41830.00 COMMUNICATIONS 159,063 172,143 172,143 218,533 46,390 26.95
41910.00 COMMUNITY DEVELOPMENT 286,031 394,803 394,803 426,564 31,761 8.04
41920.00 INFORMATION TECHNOLOGY 503,650 585,502 615,502 817,191 201,689 32.77
41940.00 FACILITIES - CITY HALL 814,571 923,726 981,836 991,062 9,226 0.94
42100.00 POLICE 7,006,387 7,716,835 8,003,263 8,549,775 546,512 6.83
42200.00 FIRE 2,779,249 3,029,286 3,029,286 3,398,433 369,147 12.19
42400.00 BUILDING INSPECTION 836,520 917,814 917,814 977,901 60,087 6.55
42500.00 EMERGENCY MANAGEMENT 29,278 17,680 17,680 18,290 610 3.45
42700.00 ANIMAL CONTROL 28,800 36,000 36,000 36,000
43050.00 ENGINEERING 492,621 479,673 640,173 504,037 (136,136) (21.27)
43100.00 STREET 1,607,520 1,782,219 1,782,219 1,787,233 5,014 0.28
43400.00 CENTRAL GARAGE 556,945 632,629 632,629 668,474 35,845 5.67
43600.00 DEVELOPMENT PROJECTS 30,086
45100.00 RECREATION 582,291 652,550 652,550 754,589 102,039 15.64
45200.00 PARKS 1,995,629 2,077,171 2,099,646 1,989,630 (110,016) (5.24)
45500.00 LIBRARIES 24,500 23,140 23,140 30,077 6,937 29.98
80000.00 Transfers to other Funds 248,488 262,488 552,488 265,888 (286,600) (51.87)
TOTAL - FUND 101 20,351,793 22,168,668 23,024,456 24,093,139 1,068,683 4.64
DEBT SERVICE FUNDS
47000.00 DEBT SERVICE 5,176,007 5,185,248 5,185,248 5,071,592 (113,656) (2.19)
80000.00 Transfers to other Funds 2,125 38,568 38,568 100.00
TOTAL - DEBT SERVICE FUNDS 5,178,132 5,185,248 5,185,248 5,110,160 (75,088) (1.45)
Fund 210 - CABLE FRANCHISE FUND
41340.00 PUBLIC CABLE ACCESS 3,576 3,700 3,700 3,700
TOTAL - FUND 210 3,576 3,700 3,700 3,700
Fund 225 - CAPITAL PARK FUND
45200.00 PARKS 283,874 2,505,600 2,505,600 5,600 (2,500,000) (99.78)
TOTAL - FUND 225 283,874 2,505,600 2,505,600 5,600 (2,500,000) (99.78)
Fund 240 - EDA SPECIAL REVENUE FUND
46500.00 ECONOMIC DEVELOPMENT 165,578 724,838 724,838 655,548 (69,290) (9.56)
TOTAL - FUND 240 165,578 724,838 724,838 655,548 (69,290) (9.56)
Fund 410 - REVOLVING EQUIPMENT FUND
42100.00 POLICE 390,294 260,000 260,000 356,000 96,000 36.92
42200.00 FIRE 615,420 70,000 70,000
42400.00 BUILDING INSPECTION 48,717
42500.00 EMERGENCY MANAGEMENT 30,760 46,600 46,600 46,600
43050.00 ENGINEERING 49,542
43100.00 STREET 102,201 712,000 712,000 843,000 131,000 18.40
43400.00 CENTRAL GARAGE 19,800 20,000 20,000 20,000
45200.00 PARKS 537,058 35,600 35,600 327,000 291,400 818.54
TOTAL - FUND 410 1,793,792 1,074,200 1,074,200 1,662,600 588,400 54.78
Fund 430 - REVOLVING PARK EQUIP FUND
45200.00 PARKS 53,168 1,140,000 1,155,000 870,000 (285,000) (24.68)
80000.00 Transfers to other Funds 920,000 920,000 (920,000) (100.00)
TOTAL - FUND 430 53,168 2,060,000 2,075,000 870,000 (1,205,000) (58.07)
From Amended Budget
EXPENDITURES - BY DEPARTMENT
CITY OF PRIOR LAKE
BUDGET REPORT
2024 2025 2025 2026 2026 2026
ACTIVITY COUNCIL ADOPTED AMENDED PROPOSED PROPOSED PROPOSED
ACCOUNT DESCRIPTION BUDGET BUDGET BUDGET AMT CHANGE % CHANGE
From Amended Budget
EXPENDITURES - BY DEPARTMENT
CITY OF PRIOR LAKE
BUDGET REPORT
Fund 440 - FACILITIES MANAGEMENT FUND
41940.00 FACILITIES - CITY HALL 371,914 24,675 44,675 447,000 402,325 900.56
42100.00 POLICE 17,964 300,000 373,000 348,000 (25,000) (6.70)
42200.00 FIRE 36,856 147,500 372,500 70,000 (302,500) (81.21)
43100.00 STREET 15,000 15,000 103,000 88,000 586.67
43400.00 CENTRAL GARAGE 9,962
45200.00 PARKS 15,080 78,000 125,000 47,000 60.26
45500.00 LIBRARIES 453,757 300,000 300,000 200,000 (100,000) (33.33)
TOTAL - FUND 440 905,533 787,175 1,183,175 1,293,000 109,825 9.28
Fund 450 - PERMANENT IMPROVEMENT REVOLVING FUND
43100.00 STREET 46,793 64,827 1,175,000 1,110,173 1,712.52
80000.00 Transfers to other Funds 94,590 369,736 369,736 371,250 1,514 0.41
TOTAL - FUND 450 141,383 369,736 434,563 1,546,250 1,111,687 255.82
Fund 601 - WATER FUND
41520.00 FINANCE 123,445 130,796 130,796 151,673 20,877 15.96
49400.00 WATER 3,699,120 4,723,227 4,313,727 6,308,267 1,994,540 46.24
80000.00 Transfers to other Funds 1,040,002 993,883 993,883 1,929,450 935,567 94.13
TOTAL - FUND 601 4,862,567 5,847,906 5,438,406 8,389,390 2,950,984 54.26
Fund 602 - STORM WATER UTILITY
49420.00 WATER QUALITY 819,544 1,431,704 1,446,704 1,317,691 (129,013) (8.92)
80000.00 Transfers to other Funds 437,806 902,300 902,300 476,000 (426,300) (47.25)
TOTAL - FUND 602 1,257,350 2,334,004 2,349,004 1,793,691 (555,313) (23.64)
Fund 604 - SEWER FUND
41520.00 FINANCE 123,402 130,506 130,506 151,373 20,867 15.99
49450.00 SEWER 4,053,254 4,641,946 5,160,946 5,342,358 181,412 3.52
80000.00 Transfers to other Funds 718,318 407,133 407,133 1,041,000 633,867 155.69
TOTAL - FUND 604 4,894,974 5,179,585 5,698,585 6,534,731 836,146 14.67
TOTAL - ALL FUNDS 39,891,720 48,240,660 49,696,775 51,957,809 2,261,034 4.55
3,717,149 4.69
From Original Budget
City of Prior Lake Council Meeting 9.23.2025
2026 Budget Attachment 3
Budgeted Funds BSA: Finance Review Budget
Debt Capital Revolving Revolving Park Permanent Facilities Total Total
General Service Cable Park Equipment Equipment Improvement Management EDA Governmental Water Sewer Water Quality Enterprise Budgeted
Fund Funds Fund Fund Fund Fund Revolving Fund Fund Funds Fund Fund Fund Funds Funds
Revenues / Sources
Property Taxes
Levy - Tax Capacity 16,267,024$ -$ -$ -$ 925,000$ 595,000$ -$ 305,000$ 405,000$ 18,497,024$ -$ -$ -$ -$ 18,497,024
Levy - Tax Capacity for Debt Service 2,979,221$ 2,979,221 2,979,221
Levy - Market Value 265,888 - - - - - - 265,888 - - - - 265,888
MVHC Aid - - - - - - - - - - - - -
Special Assessments 4,000 485,532 - - - 244,846 - - 734,378 - - - - 734,378
Licenses & Permits 472,710 - - - - - - 472,710 - - - - 472,710
Fines & Forfeits 108,000 - - - - - - 108,000 - - - - 108,000
Intergovernmental 4,033,388 - - - - 212,500 - - 4,245,888 - - - - 4,245,888
Charges for Services 1,325,329 - 12,000 217,767 - - - 26,988 1,582,084 5,659,319 6,007,314 2,127,213 13,793,846 15,375,930
Other Revenues 948,800 89,800 - 41,400 14,000 198,200 26,100 28,700 11,100 1,358,100 237,900 119,500 100,100 457,500 1,815,600
Bond Proceeds - - - - 230,000 1,500,000 - 1,730,000 - .- 1,730,000
Lease Proceeds - - - - - - - - - - - - - - -
Transfers From Other Funds - -
General Fund - 265,888 - - - - - - - 265,888 - - - - 265,888
Debt Service Funds - 38,568 - - - - - - - 38,568 - - - - 38,568
Water Fund 270,000 629,450 - - - - - 30,000 - 929,450 - - - - 929,450
Sewer Fund 268,000 - - - - - - 30,000 - 298,000 - - - - 298,000
Water Quality Fund 130,000 - - - - - - - - 130,000 - - - - 130,000 Trunk Reserve Fund - - - - - - - - - - - - - - -
TIF Fund - - - - - - - - - - - - - - -
PIR Fund - 371,250 - - - - - - - 371,250 - - - - 371,250
Facilities Management Fund - - - - - - - - - - - - - - -
Capital Park Fund - - - - - - - - - - - - - - -
Construction Fund - - - - - - -
Police Forfeiture Fund - - - - - -
Public Safety Special Revenue Fund - - - - - - - - - -$ -$ -$ -
Total Revenues / Sources 24,093,139$ 4,859,709$ 12,000$ 259,167$ 939,000$ 1,005,700$ 500,946$ 1,893,700$ 443,088$ 34,006,449$ 5,897,219$ 6,126,814$ 2,227,313$ 14,251,346$ 48,257,795$
Expenditures / Uses
Employee Services 17,396,514$ -$ -$ -$ -$ -$ -$ -$ 181,798$ 17,578,312$ 1,397,774$ 825,735$ 438,146$ 2,661,655$ 20,239,967$
Current Expenditures 6,232,737 - 3,700 5,600 - - 8,000 - 88,750 6,338,787 2,413,666 2,817,496 387,895 5,619,057 11,957,844
Capital Outlay 198,000 - - - - - - - 385,000 583,000 386,000 500,000 402,000 1,288,000 1,871,000
Capital Improvements - - - - 1,662,600 870,000 1,167,000 1,293,000 - 4,992,600 2,100,000 1,188,000 - 3,288,000 8,280,600
Subtotal 23,827,251$ -$ 3,700$ 5,600$ 1,662,600$ 870,000$ 1,175,000$ 1,293,000$ 655,548$ 29,492,699$ 6,297,440$ 5,331,231$ 1,228,041$ 12,856,712$ 42,349,411$
Transfers To Other Funds
General Fund -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 270,000$ 268,000$ 130,000$ 668,000$ 668,000$
Construction Fund - - - - - - - - - - 1,000,000 743,000 346,000 2,089,000 2,089,000
Equipment Fund - - - - - - - - - - - - - - -
Park Equipment Fund - - - - - - - - - - - - - - -
Debt Service Funds 265,888 38,568 - - - - 371,250 - - 675,706 629,450 - - 629,450 1,305,156
PIR Fund - - - - - - - - - - - - - - -
Facilities Management Fund - - - - - - - - - - 30,000 30,000 - 60,000 60,000
EDA Fund - - - - - - - - - - - - - - -
Severance Compensation Fund - - - - - - - - - - - - - - -
Contingency - - - - - - - - - - - - - - -
Debt Service - 5,071,592 - - - - - - - 5,071,592 162,500 162,500 89,650 414,650 5,486,242
Subtotal 265,888$ 5,110,160$ -$ -$ -$ -$ 371,250$ -$ -$ 5,747,298$ 2,091,950$ 1,203,500$ 565,650$ 3,861,100$ 9,608,398$
Total Expenditures / Uses 24,093,139$ 5,110,160$ 3,700$ 5,600$ 1,662,600$ 870,000$ 1,546,250$ 1,293,000$ 655,548$ 35,239,997$ 8,389,390$ 6,534,731$ 1,793,691$ 16,717,812$ 51,957,809$
Change in Fund Balance -$ (250,451)$ 8,300$ 253,567$ (723,600)$ 135,700$ (1,045,304)$ 600,700$ (212,460)$ (1,233,548)$ (2,492,171)$ (407,917)$ 433,622$ (2,466,466)$ (3,700,014)$
2026 City Property Tax Levy Comparison Council Meeting 9.23.2025Attachment 3
Change 25 - 26
Property Taxes 2025 2026 Amount Percent
Levy - Tax Capacity
General Fund - Operating 14,848,732$ 16,267,024$ 1,418,292$ 9.6%
Debt Service Funds 2,929,190 2,979,221 50,031 1.7%
Revolving Equipment Fund 1,025,000 925,000 (100,000) -9.8%
Revolving Park Equipment Fund 535,000 595,000 60,000 11.2%
Permanent Improvement Revolving Fund - - - n/a
Facilities Management Fund 255,000 305,000 50,000 19.6%
19,592,922 21,071,245 1,478,323 7.5%
Levy - Market Value - General Fund 262,488 265,888 3,400 1.3%
Total City Levy 19,855,410$ 21,337,133$ 1,481,723$ 7.46%
2026 EDA Property Tax Levy Comparison
Change 24 - 25
Property Taxes 2025 2026 Amount Percent
Total Economic Dev Authority Levy 405,000 405,000 - 0.0%
2026 Budget Expenditure Comparisons (2025 Original Budgets)
Capital Revolving Revolving Park Permanent Facilities Total Total
General Debt Service Cable Park Equipment Equipment Improvement Management EDA Governmental Water Sewer Water Quality Enterprise Budgeted
Fund Funds Fund Fund Fund Fund Revolving Fund Fund Funds Fund Fund Fund Funds Funds
2026 Total Expenditures / Uses 24,093,139$ 5,110,160$ 3,700$ 5,600$ 1,662,600$ 870,000$ 1,546,250$ 1,293,000$ 655,548$ 35,239,997$ 8,389,390$ 6,534,731$ 1,793,691$ 16,717,812$ 51,957,809$
2025 Total Expenditures / Uses 22,168,668$ 5,185,248$ 3,700$ 2,505,600$ 1,074,200$ 2,060,000$ 369,736$ 787,175$ 724,838$ 34,879,165$ 5,847,906$ 5,179,585$ 2,334,004$ 13,361,495$ 48,240,660$
Change 2025 to 2026 ($)1,924,471$ (75,088)$ -$ (2,500,000)$ 588,400$ (1,190,000)$ 1,176,514$ 505,825$ (69,290)$ 360,832$ 2,541,484$ 1,355,146$ (540,313)$ 3,356,317$ 3,717,149$
Change 2025 to 2026 (%)8.68%-1.45%0.00%-99.78%54.78%-57.77%318.20%64.26%-9.56%1.03%43.46%26.16%-23.15%25.12%7.71%
2026 Budget Expenditure Comparisons (2025 Amended Budgets)
Capital Revolving Revolving Park Permanent Facilities Total Total
General Debt Service Cable Park Equipment Equipment Improvement Management EDA Governmental Water Sewer Water Quality Enterprise BudgetedFundFundsFundFundFundFund Revolving Fund Fund Funds Fund Fund Fund Funds Funds
2026 Total Expenditures / Uses 24,093,139$ 5,110,160$ 3,700$ 5,600$ 1,662,600$ 870,000$ 1,546,250$ 1,293,000$ 655,548$ 35,239,997$ 8,389,390$ 6,534,731$ 1,793,691$ 16,717,812$ 51,957,809$
2025 Total Expenditures / Uses 23,024,456$ 5,185,248$ 3,700$ 2,505,600$ 1,074,200$ 2,075,000$ 434,563$ 1,183,175$ 724,838$ 36,210,780$ 5,438,406$ 5,698,585$ 2,349,004$ 13,485,995$ 49,696,775$
Change 2025 to 2026 ($)1,068,683$ (75,088)$ -$ (2,500,000)$ 588,400$ (1,205,000)$ 1,111,687$ 109,825$ (69,290)$ (970,783)$ 2,950,984$ 836,146$ (555,313)$ 3,231,817$ 2,261,034$
Change 2025 to 2026 (%)4.64%-1.45%0.00%-99.78%54.78%-58.07%255.82%9.28%-9.56%-2.68%54.26%14.67%-23.64%23.96%4.55%
1
2026 Proposed Tax Levy Components
Attachment 4
LEVY CHANGE – 7.46%
Personnel Adds: 1.74%
Personnel Adds - $345,000 The city’s current full-time equivalent (FTE) headcount is 122.02. It is proposed to increase by 3 FTE to 125.02 in
2026. The 2026 budget includes new tax levy funding of $346k for a new Network Administrator position (July 2026
start), and the addition of a Police Sergeant and a Police Records Specialist.
Capital Improvement Program (CIP) Tax Levy Components – 0.05%
Equipment Replacement funding – ($100,000) The Equipment Replacement Plan (ERP) utilizes general tax levies to support replacement of the City’s equipment
and vehicle fleet. The ten-year average annual cost for the plan is about $1.65M. The financing plan reflects a
gradual increase in the tax levy until the annual levy reaches our annual funding goal. The proposed total levy for
2026 is $925k. The 2025 amount included a levy in advance of $150k, for a total of $1.025M which is why this
shows as a decrease from prior year. Since the proposed levy increase is gradual, bonding may be required for the
plan to meet our funding needs.
Park Equipment Replacement funding -$60,000 The Revolving Park Plan funds capital replacement projects, park amenities, and trail, sidewalk, and boardwalk
replacement. The plan proposes a phased increase in the tax levy to cover the capital projects in the plan. The
proposed total levy for 2026 is $595k.
Facilities Management Plan funding -$50,000
The Facility Management Plan (FMP) was developed to plan for major repairs, replacements, and upgrades for all
city facilities on a long-term basis (25 years). It does not cover minor expenses for repairs and maintenance.
Those will continue to be funded through the operating budgets. 2026 capital projects include projects at the
Police station, Library & Club Prior, Maintenance Center and City Hall. The proposed total levy for 2026 is $305k.
Mandatory Items – 5.68%
STAFFING
Wage/COLA and Benefits - $939,000
The budget includes a proposed cost of living adjustment, step increases, city payroll taxes and health/dental
insurance premium contribution increase, as well as incorporating the financial impacts of the police compensation
study that was completed in 2025. Union negotiations will be held in the fall of 2025.
CURRENT EXPENDITURES
Professional Services – ($197,000) • Reduction in funding for professional services primarily to decreases in Engineering, Human Resources, and
Parks professional services needs compared to 2025. In 2025 there were professional services in Engineering
as the department works on filling open positions. Also, there was $81k in professional services budgeted for
the compensation studies and park referendum consulting costs.
Supplies – ($24,000)
• This includes a $54k decrease for fuel and small equipment.
• There are offsetting increases of $30k in operating supplies, all repairs & maintenance supplies, uniforms/PPE,
etc.
2
Other Services and Charges – $163,000 • This includes a $92k increase for software service contracts primarily due to $40k budgeted for ADA compliant
website, $24k for new Police software, $18k for new IT needs and $11k for new Recreation software
implementation
• $35k increase in utilities (electric/gas)
• $16k increase in memberships/subscriptions, primarily for Fire, Administration and Police
Maintenance Agreements – $56,000
Increase in funding for maintenance agreements including general, building and equipment maintenance due to
increases in fertilizer & weed spraying, trees and vegetation, contracted mowing and graffiti removal services and
new development sealcoat.
Capital Outlay – $74,000 2026 costs are estimated to be $74k more than the prior year. 2026 includes a high-speed ballot scanner
recommended by Scott County ($30k) and IT increase of $80k to replace SAN and servers, as well as switch
replacement.
Non-Tax Revenue – ($397,000) • Intergovernmental revenue is increasing by $321k compared to 2025. This includes:
o $131k increase in township fire/rescue aid based on the fire agreement
o $125k increase in local government aid from the SMSC
o $76k increase in state road and bridge aid
o $60k increase in police state aid
o Partially offset by decrease in capital grants of $106k
• Increase of $65k for City Contracted Services based on 2024 revenue plus increased Police contracted rate due
to 2025 compensation study.
• Increase of $35k for project admin/engineering fees based on the proposed projects.
• Increase in Transfer-In as a funding source of $53k. This is based on operating transfers from the utility funds.
• Increase in interest earnings of $16k. Budget reflects anticipated earnings on investments.
• Revenue from residential building permits/fees budget is $117k less than the 2025 budget. The city collects
building permits and plan check revenue on new residential and townhome units built. Prior Lake is still
growing, but the 2026 estimate for new construction units is 50 single family/0 townhomes (50 total) which
generates less revenue than the 2025 budget mix of 60 single family/20 townhomes (80 total).
• Franchise fee revenue decrease of $27k.
OTHER
Change in Use of Reserves - $750,000
2025 Use of Reserves $750,000
2026 Proposed Use of Reserves $0
$750k change in use of reserves due to 2025 budget amendments.
Background information: The city’s comprehensive financial management plan calls for maintaining a fund balance
between 40-50% to ensure adequate reserves for cash flow, unplanned expenditures, and to maintain the city’s
credit worthiness (AAA credit rating). Staff recommends the use of reserves for one-time expenditures or revenue
shortfall; otherwise, the fund balance could drop below the level stated in the comprehensive financial
management plan over time.
2025 Council approved budget amendments resulted in use of reserves of $750k. Reserves were used for
carryforward items budgeted in 2025, Police wage adjustments based on LELS labor agreements and a transfer to
the capital park fund for the Trunk Highway 13 Trail segment 1 project . The total 2026 planned use of reserves is
$0. Over the next several years, the city may need to levy to maintain a reserve balance of 40%-50% of the
subsequent year’s expenditures.
Other Items – $50,000
Increase in debt service compared to 2025.
2026 Preliminary Tax September 23, 2025 BudgetLevy and
PriorLakeMN.gov ChambersDecember 9 at 7:00 p.m. in the Council The public budget meeting will be held be discussed, and public input allowedmeeting, when the budget and levy will Announce
the time and place of the o 2026preliminary property tax levy for pay Adopt a preliminary budget and certify a o By September 30, the City Council must:2 2026 Preliminary Tax Levy
and Budget
PriorLakeMN.gov Tax Levy and Budget Schedule Public Budget Meeting/Adopt Final Tax –Dec. 9 Budget Work Session–Nov. 11Preliminary Tax Levy and Budget Public Budget Meeting/Adopt -September
23 Budget Work Session, if needed–August 262026 only–Discussion/CIP Debt Impacts Preliminary Budget/Tax Levy –July 23 Financial Plan, CIP Planyear -Personnel Plan, 10–3 ScheduleLevy
and 2026 Tax
PriorLakeMN.gov4 2026 Preliminary Budgets–Overview
PriorLakeMN.gov community growth, but at a slower rate than the previous several years is anticipated)Reduction in the rate of residential development (Prior Lake is still experiencing
Inflationary/Contract increases for wages and commoditiesmandatesUnfundedequipment/facilitiesequipment/parkforneedsreplacementcapitalannualforstrategyPayGoforplanscapitalFundingSpecialistRecords
PoliceandSergeantPolicestart),2026year-(midAdministratorNetworkaforfundingpersonnelProposedThe proposed budgets reflect additional resources needed for the following areas:5 Budget
Talking Points
PriorLakeMN.gov 1%$265,888 MV Debt Service Transfer12%$2,774,296 Parks & Recreation12%$2,959,744 Public Works4%$1,032,191 All Other-Public Safety 50%11,948,208 FirePolice & -Public
Safety 21%$5,112,812 General Government 6 General Fund Expenditures $24,093,139
PriorLakeMN.gov 3%$668,000 FundsTransfers From Other 2%$532,800 Other Revenues8%$1,853,329 Charges for Services17%$4,033,388 Intergovernmental2%$472,710 PermitsLicenses & 1%$265,888
Market Value-Property Tax Levy 67%$16,267,024 Tax Capacity-Property Tax Levy 7 General Fund Revenues $24,093,139
PriorLakeMN.gov ConsiderationsLevyTaxPropertyBase%4.7 Unfunded Mandates%6.0ServiceDebt%9.0*GrowthWage%3.4Construction)(NewGrowth%6.1 2026 Base Tax Levy Considerations 8 budget is personnel
costs.* Used March YTD wage growth of 4.3% as 72% of city
PriorLakeMN.gov Components of the Tax Levy Change increase~50% of the total levy Public Safety represents •total is a 7.4% levy increaseBase levy considerations •$1,482,000 (7.46% increase)•levy
is $21,337,133. The 2026 proposed tax •9
PriorLakeMN.gov10 EDA tax rate of .60% (4.56% decrease).•on the preliminary budgets.from the prior year levy based increase%0of $405,000 which is a tax levy EDA Total •City tax rate
of 31.4% (3.00% increase).•based on the preliminary budgets. from the prior year levy % increase7.5a which is 21,337,132of $tax levy CITY Total •Property Tax Projection Summary
PriorLakeMN.gov City Levy/Tax Capacity = Tax Rate Metro Area Average City Tax Rates 11 preliminary 2026 budget is 31.4%2026 Prior Lake City Tax Rate based on •2025 Prior Lake City Tax
Rate of 30.50%•County Metro area cities.-for Sevenconsistently lower than average tax rate Prior Lake’s Tax Rate has been •
PriorLakeMN.gov Scott County Tax Capacity Rate by City 12 31.4%based on preliminary 2026 budget is 2026 Prior Lake City Tax Rate estimate •City Levy/Tax Capacity = Tax Rate•
PriorLakeMN.gov ChangeResident Impact of Proposed City Tax Levy 13
PriorLakeMN.gov pay 2026for a median valued home of $433,600 for 76The estimated increase in city tax is $•Median Valued HomeResident Impact of City Tax Levy 14
PriorLakeMN.gov Tax Levy and Budget Schedule Public Budget Meeting/Adopt Final Tax –Dec. 9 Budget Work Session–Nov. 11Preliminary Tax Levy and Budget Public Budget Meeting/Adopt -September
23 Budget Work Session, if needed–August 262026 only–Discussion/CIP Debt Impacts Preliminary Budget/Tax Levy –July 23 Financial Plan, CIP Planyear -Personnel Plan, 10–15 ScheduleLevy
and 2026 Tax
PriorLakeMN.gov TaxationAuthority Property Tax Levy to Scott County Department of and Certifying Preliminary 2026 Economic Development Preliminary 2026 Economic Development Authority
Budget Consider Approval of a Resolution Approving -Resolution 2 Department of TaxationCity of Prior Lake Property Tax Levy to Scott County Preliminary 2026 City Budgets and Certifying
Preliminary 2026 Consider Approval of a Resolution Approving -Resolution 1Council Action RequestedCouncil Discussion 16