Duluth Mayor Roger Reinert sketches out 2026 city budget, with 4% property tax hike

DULUTH – Mayor Roger Reinert proposes reducing a 17% budget deficit through a property tax increase, investments and spending cuts, potentially leaving up to 55 open jobs unfilled.

On Thursday, he shared some sparse details on how city administration will get there, including a less-than-feared 4.1% property tax increase. Some of that will be absorbed by new growth to the city’s tax base. More than $5.5 million of the $7.4 million deficit will come from elsewhere.

The proposed increase is on the heels of St. Louis County’s initial vote to raise its share of property taxes by 12.4%, although that’s expected to be offset by 7% in tax base growth. St. Cloud and Rochester are facing 4.5% and 5.9% increases, respectively.

“There are many Duluth homeowners, either seniors or people with disabilities or other fixed incomes, who are struggling to afford that property tax bill,” Reinert said, explaining his decision to only moderately increase property taxes.

More than 30% of the city’s budget is derived from local government aid (LGA), which was last increased in 2023.

And while “many of us thought it was a win when LGA stayed flat” during the last legislative session, he said, the $35 million in such aid that will come to Duluth doesn’t keep pace with wage increases and inflation.

Reinert pointed to competitive wage increases in several city employee contracts as part of the explanation for the budget deficit. He said he would look to cut in areas that have less impact on the city’s front-line services and likely reduce administration and its support. The city also proposes investing some dividends from its $40 million community investment trust fund rather than putting all proceeds into the general fund.

In 2027, the deficit is projected to be $5.3 million, so recurring cuts, rather than one-time, are expected.

Councilor Wendy Durrwachter said she’d like to see a deeper level of detail before voting on a maximum levy at the end of the month. Once the council votes it legally cannot raise the amount further. A planned daylong retreat next week was rescheduled to November.

Reinert said the date was moved because budget work still isn’t finished.

The city portion of property taxes in Duluth is 29%, including 2% for parks. The county gets about 40% of Duluthians’ property tax revenue, and the school district 26%. The city, which employs more than 900, has a $110 million general fund.

Last year’s city increase was about 2%, to match its new tax base growth. Reinert billed it as a zero percent increase because of that revenue.

The county saw more than $305 million in new construction in the past year, which a news release says is its largest single-year increase ever. Half of that growth is in new residential construction.