FAIRMONT– The Fairmont City Council held its Truth in Taxation meeting on Monday night and after some council discussion, a $100,000 reduction to the capital project levy brought down the total levy from an 8.2 percent increase to 6.9 percent increase.

Finance Director Paul Hoye reminded the council that it has held two budget workshops, one in August and one in September and that the preliminary levy was set at an 8.2 percent levy increase.

In his presentation, Hoye said he would go over some of the cost drivers for the levy increase, as well as the general expenses and some capital projects.

In 2026, expenses are expected to go up $453,000 with about $300,000 of it being personnel expenses including a 3.5 percent COLA increase. The rest, $147,000, is for general fund operations and the largest thing affecting it is the legal budget, which will see a $70,000 increase for 2026. Hoye said the tree dump budget was also increased by $10,000 for 2026.

“Overall across all programs, we’ve had a property insurance increase of $14,000 so that’s where the remaining expense increase came from,” Hoye explained.

When it comes to projected revenues, Hoye said there isn’t much of a change expect that there is a slight increase of state aid. The city is also budgeting an additional $100,000 for interest earnings and Hoye said they continue to see the investment portfolio doing well.

As for the Capital projects, Hoye spoke about a few of the projects planned for 2026 including a library lighting retrofit project at $25,000, squad car equipment replacement for the police department totaling $114,000 and bunker gear and radios for the fire department at $64,000. For the street department, the purchase of a $260,000 dump truck and $370,000 loader are planned and for the parks department, $320,000 is budgeted to continue with the removal of Emerald Ash Borer, along with a $90,000 Bobcat.

Continuing with capital projects, Hoye said there are some issues with the pool water at the Aquatic Park due to the deterioration of the original sand filters, so $250,000 is in the budget for replacement of the sand filters. At the airport, $630,000 is budgeted with the majority going toward trees clearing ($200,000) and a tractor mower ($150,000).

In his presentation Hoye touched on what liquor store funds are planned to be spent on in the 2026 budget. He said that they’re projecting $664,000 in net income before transfers. Projects at the airport, Aquatic Park and some of the parks and recs projects are expected to use some of those funds.

“We are going to be spending down reserves out of our liquor store funds, about $327,000. That still will leave about $2.5 million at the end of 2026 in our liquor store funds for future projects,” Hoye said.

Moving to the property tax levy increase for 2026, Hoye said the majority of property taxes go toward operations, but that $1.8 million is going toward debt service, $1.2 million is going toward the Capital Improvement Plan (CIP) and $100,000 is going to the Economic Development Authority (EDA).

Overall he said the city is looking at a $612,000 increase in the levy. He noted that it is increasing by $100,000 again for street improvement projects.

“I know that there are concerns about additional taxes in the community and put on our citizens and I understand that point. I live in Fairmont and pay the taxes here, too. I understand budget pressures… and try to maintain a levy that people can afford. At the same time, I have to look at the needs of the city and make sure that we’re able to replace equipment when we need to, update streets when we need to, make improvements to buildings. A lot of the levy increase is related to those items,” Hoye said.

He showed a comparison to 15 cities and their tax rates and of the 15 cities, Fairmont is the fifth lowest so Hoye said Fairmont’s tax rate is very competitive.

Julie Zarling, the assistant finance director, then went over the PUC budget. She said the first draft of the 2026 budget was presented to the PUC Board in early November and on Nov. 18, the final version was passed and sent to council for approval.

She said that SMMPA, who the city gets its electric from, has passed an overall 10 percent decrease in rates effective Feb. 1, 2026 and with the decrease Zarling said they are proposing no rate increase for the electric department in 2026.

As for projects, Zarling said there are three ongoing big projects for the electrical department including the west side substation, transformer replacement and a 10th Street project.

Moving to the water department, Zarling said back in 2022 a water rate study was done and that the PUC decided not to go with the recommended rate for 2026. Instead it is proposing not to raise rates for 2026 because when looking at cash flows, there are funds in place to support required capital improvements and maintain stable rates in the future without an increase.

Finally, with the sewer/wastewater, Zarling said in October 2024 a rate study was done and at that time a 5 percent increase was recommended for 2026, with the understanding that there was a 30 year bond but Zarling said it’s actually a 20 year bond so the PUC has recommended a 7 percent blended increase to all rates, residential, commercial and industrial for 2026.

There are a few projects for wastewater, too, including the continuation of updating some lift stations.

“Our change for residential would be $3.16 or a little over 1 percent. There’s not much of a change. It’s all 0. We’re not changing any rates except for our wastewater,” Zarling said. “Average increase for commercial would be about $9 per month or less than 1 percent so it’s not going to affect them much either.”

After both Hoye and Zarling finished their presentations, the public comment portion was opened and two residents shared some general concerns about the budget.

Before the council could ask questions, Hoye shared some capital improvement projects that were changed or removed since the preliminary levy was set. While there had been discussion about some vehicles in the park department budget but two trucks were removed and other vehicles will be handed down and used from the electrical department. Hoye said that a robotic mower was also removed from the 2026 budget.

“We also had to push back a larger slip lining project. It was a million dollar slip lining project that we had budgeted. It was in our original CIP for 2026,” Hoye explained.

Council Member Britney Kawecki noted that this is her fifth year working with the budget and that every year she asks for the same thing, which she’s never gotten.

“I think the explanation is the most important. I’ve asked for plans, I’ve asked for analysis and I believe transparency and accountability is the most important,” Kawecki said.

She made a motion to remove $100,00 from the budget for vehicle replacement until a needs analysis is complete. Council Member Randy Lubenow seconded it.

Council Member Jay Maynard asked if the council is supposed to expect that vehicles that are already over 30 years old won’t get any worse over the next year.

Council Member James Kotewa said like the city’s learned with its streets, not putting money toward something when it needs it, especially to keep the levy low, will cause problems later.

Hoye confirmed that is happened in the past.

“Although we may have had a lot lower tax rate… we also had failing infrastructure and streets that had to be repaired and now we have $60 million in streets we’re behind on replacing,” Hoye said.

Kawecki said she still thinks a needs analysis on what they can rent, lease or remove needs to be done.

“What I’m trying to get us toward as a council is forcing the needs analysis… we need to stop overspending,” Kawecki said.

Lubenow said he agreed that the council needs to give staff what they need, but make it affordable to the citizens.

In a roll call vote, the motion passed 3-2 with Maynard and Council Member Wayne Hasek opposed.

Kawecki also made made a motion to remove a $700,000 hydro vac from the water department budget until a needs analysis can be done. Lubenow seconded the motion.

Maynard asked whether it would affect the levy and Hoye said that the money would be coming from the water utility and would not affect the levy.

York added, after another question, that the two current hydro vac, and the new one, will all be used for various reasons.

Kawecki said that it did not matter whether the funds come from property taxes or utility payments– it is all tax payer dollars.

“It’s a $700,000 expenses. We will have three vac trucks in the city of Fairmont… we are going to have one van truck per department in the city of Fairmont. I don’t know how this can be justified…,” Kawecki said.

In a roll call vote, the motion failed 3-2 with Kotewa, Maynard and Hasek opposed.

Kawecki made another motion to remove $100,00 in the budget for the building sinking fund until such a time that there’s plan in place to build or remodel a building to move forward.

She further explained that the fund exists for a future possible city hall, fire hall or police hall but stressed that there needs to be a plan before taxpayers are putting more money away.

Lubenow seconded the motion. In a roll call vote, the motion failed 3-2 with Kotewa, Maynard and Hasek opposed.

In closing the budget discussion, Lubenow noted that the Martin County Board of Commissioners had made changes to its levy and tightened up its budget.

“I’m disappointed in ways that we don’t take that same clue. People are suffering in Fairmont and looking for ways to reduce their personal budgets. I’m just disappointed that we as a council don’t do a better job of watching the money our citizens have to take out of their pockets,” Lubenow said.

Mayor Lee Baarts then read a series of resolutions. The first was to adopt the 2026 property tax levy, with the approved $100,000 reduction to the capital project levy. The motion passed 4-1 with Kawecki opposed.

With the $100,000 removed, the levy dropped to a 6.9 percent increase with a 4.5 percent tax rate increase.

A resolution adopting the 2026 budget passed 3-2 with Lubenow and Kawecki opposed.

A resolution amending resolution 2024-50 of the city of Fairmont relating to public utility wastewater rates passed unanimously.

Finally, a resolution to approve the 2026 Capital Improvement Plan passed 4-1 with Kawecki opposed.