DULUTH — Duluth Mayor Emily Larson pledged to fix 18 miles of road next year and invest in decades-old problems through what she billed a "good news" budget proposal unveiled to the City Council on Monday night.

Calling the hefty increase to local government aid sent to the city "an absolute game changer," Larson, in the aftermath of a stunning primary defeat earlier this month in her bid for a third term, laid out a back-to-basics budget that capitalizes on new state money.

For two decades the city has struggled to provide core street, park and public safety services in the way that leaders have wanted to, she said, because of stagnant local government aid.

But next year's $4.4 million increase — thanks to the state's $17.5 billion surplus — is the largest the city has received in at least 20 years. It's a 14% boost, along with strong sales tax revenue, that allows the city to make "critical investments" through its $108.5 million general fund budget, said Larson, who noted the budget reflects the priorities of the community and ensures that everyone benefits from it.

"This is about taking care of the community now and taking care of the community going forward," she said.

Budget highlights:

  • Larson is proposing an $824,000 increase to its $42.15 million property tax levy, an increase of 2%. But because of growth in the city's tax base, many residents and businesses are expected to see a drop in what they pay. The owner of a $225,000 home would see a $69 reduction and the owner of a $750,000 business would see a decrease of $454. Last year, property taxes going to the city increased by nearly 9%.
  • New investments amounting to about $1 million that include new housing inspector and grant manager positions, fire department spending and increases to the snow removal budget.
  • One-time spending of $4.5 million from reserves for replacement of equipment such as snowplows and police vehicles; $1.8 million in bonuses split between the more than 800 city employees; $4 million from reserves for street repairs; and the remainder of $58 million in pandemic relief money — $38,000 — for parking ramp safety and cleanup, something downtown workers have been vocal about.

The city has about $45 million in reserves.

Of the more than 400 miles of roads within Duluth, Larson expects to fix nearly 50 of them in the next three years, with $14 million from street taxes and reserves paying for 18.5 miles next year. She said the city expects to repair another 14.5 miles in 2025, and 14.6 miles in 2026.

That level of road repair in such a short time has never been done in Duluth, she said.

Larson said the extra pay for city employees is intended to recognize staff for enduring years of unchanged state aid, at a time when the city is losing them to other jobs.

While rising health care costs were to blame for last year's property tax increase, the immediate future wasn't alarming, city administrators said, because of a change in the makeup of city employees. Fewer employees with families are working for the city, meaning lower costs.

Duluth also received $3.7 million from the state for public safety, not included in the general fund, which will be split between the fire and police departments.

Larson's proposed general fund budget increase is 5.5%.

Local government aid next year will make up 32% of the city's budget, with property taxes at 27% and sales tax at 15%, among the largest contributors.

Council President Janet Kennedy said she was "amazed" by the proposal.

"We've had some really tough years with increasing our property taxes and increasing our levy," she said. "I feel really excited about how we can move this forward and how much work the city staff did to make this happen."

The City Council, which will likely amend Larson's proposal with its own priorities, will set the tax levy in late September.