Pine City Council passes 2026 budget, property tax levy

The Pine City Council voted to pass the 2026 budget and property tax levy at Wednesday's meeting.

According to city administrator Marcy Peterson, the proposed preliminary tax levy was approved in September at $2,258,862, marking a total increase of 7.49% from last year's levy.

City staff worked to bring the levy down to $2,183,961, decreasing the approved 2026 preliminary levy by 3.57%. The final levy is a 3.92% increase from 2025.

Peterson explained that the general fund levy is increasing by $272,897, with decreases to the EDA fund levy (by $19,154), capital fund levy (by $143,256), debt service fund levy (by $15,390), and HRA fund levy (by $12,688).

The general fund budget was adopted at $3,209,422.

35% of general fund expenses goes toward public safety, with 31% assigned for general government, 22% for public works, and 12% for culture and recreation.

The budget for capital improvement fund expenses was set at $263,919.

Those expenses include payments on a fire department ladder truck and a Public Works plow truck, the parks building and ballfields, and debt due on an ECE loan.

Council member Kyle Palmer questioned if the vote to pass the Housing & Redevelopment Authority's preliminary budget and levy in September — with the stipulation that failure of the HRA to separate from Pine City by the end of 2026 would result in paying the full $42,312 budget back to the city — stands.

Peterson said she's waiting for a final answer from the city's legal services on the legality of the payback contingency.

"It's technically not even the city's funds," she explained. "But I'm waiting for a final answer from them, to see how we even correct that."

Palmer contended that because that previous motion can't be corrected, either the HRA's budget stands, or if the action taken doesn't stand, the budget for the HRA would be zero for 2026.

"We don't get to amend the vote now when it's convenient, because of a mistake on our part," Palmer said.

Mayor Kent Bombard responded by saying that the council unanimously approved the agenda with the "earmarked tagged onto that agenda that we are reviewing its legality at this point in time, and reviewing how to move forward with that."

"I do believe, Kyle, that you can continue to ask the city and the HRA to separate. I think that's well within your bounds, that you can still make that happen," said council member Gina Pettie. "I just don't know if it can be tied to tax funding."

Palmer said passing the resolution to approve the final 2026 budget and tax levy might be in conflict with a previous council vote.

"That doesn't impact the dollar amount that's being levied, which needs to be reported to the county," Peterson said.

"This is my understanding of things: We have to fix the HRA building before we can transfer it," Bombard said. "If you cut their budget away, we already know we can't afford to fix the building as it is, so let's take more money away from you and say, 'you still need to fix the building before we get rid of it.' That's what I'm seeing happening here."

Palmer said if the September vote doesn't stand, the HRA wouldn't have a budget.

"Either way, we have to follow what's legal," Palmer said. "If that was a legal vote, then that's what we would have to follow. If it's not a legal vote, and it was part of the vote that was needed for the HRA, for their budget, then approving this budget amount is wrong."

The resolution to adopt the final 2026 budget and tax levy passed in a 3-1 vote. Bombard and council members Pettie and Dave Hill voted yes, and Palmer voted no.

Council member Dan Swanson was absent from Wednesday's meeting.