Cloquet passes $28.2M budget, levy increase reduced to 3%

Dec. 3—CLOQUET — On Tuesday, the Cloquet City Council passed a $28.2 million budget and a 3% levy increase for 2026.

After passing a

preliminary maximum levy increase of 5% in September,

city staff were able to reduce the increase to 3%, now totaling $4.06 million. The reduction is largely due to the savings in reduced workers' compensation and property and liability insurance rates, according to City Administrator Tim Peterson.

"The departments themselves really didn't see any changes, but we were able to decrease the levy increase to about 3%," Peterson said.

Excluding those savings and a few additional squad car purchases, the levy and budget are nearly identical to the preliminary levy and budget reviewed by the council in September.

The council voted unanimously to pass the budget and levy, as well as a five-year capital improvement plan — a financial plan for large-scale projects over the next five years. Councilor Iris Keller was absent.

The budget increases the city's general fund — the city's main operating fund — by 0.4%, totaling $9.6 million. That's following last year's 16.9% increase to the general fund budget and a

11.2% jump in property taxes,

which city officials said were driven up by a competitive labor market, rising cost of services and limited sources of city revenue.

"All of the projects have stayed the same, and about 99.9% of the funding has stayed the same as well," Peterson said.

The slight increase in the general fund budget, Peterson said, is largely due to nearly $167,000 in wage increases, though it is being largely offset by the approximately $125,000 decrease in workers' compensation claims and insurance costs.

The council previously voted to include $40,000 toward a new comprehensive plan to guide future development in the budget. The comprehensive plan, which was last updated in 2007, is expected to cost $146,000. City officials anticipate a 50% match in grant funding, and the 2027 levy will fund the remaining amount.

The largest budget reduction is a 32% cut for the swimming pond at Pinehurst Park, now totaling about $93,000. Peterson previously explained that it is largely due to a shift in accounting of the expense and revenue-sharing agreement between the city and Cloquet Public Schools Community Education.

The budget for the city-owned hockey arenas is proposed to increase by 1.8% to cover rising electricity and disposal services prices. Peterson previously said the budget does not account for the anticipated need to replace ice makers. He said he is hopeful that lower demand to make ice in the summer will lower utility costs to the point where the budget balances out.

The Cloquet Public Library's budget is proposed to increase by 5.5%. The city's human resources budget is proposed to increase by over 10%, largely for a $15,000 wage study that city officials hope to conduct before labor contract negotiations begin in 2026.

The city's budget slightly exceeds its projected revenue of $25.4 million. However, this is largely due to project expenditure and funding cycles, according to Peterson. For example, Peterson said a sales tax-funded project at Pine Valley Park will be budgeted and constructed next year, although its funding source has been accrued for the past several years.

Before passing the budget and levy, the city held its annual truth-in-taxation hearing to review the proposed property tax increase and budget with the public and receive public comments. No one was in attendance.

The levy and budget must be adopted and certified by the county auditor and the state of Minnesota by Dec. 30.

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