city budget

City Council passed Resolution 25-131 amending the 2025 budget to make $30,000 available for a proposed parking lot purchase on the west side of Adams Street in the 1700 block; the city manager said the price was negotiated in closed session; vote was 7-1.

An agenda item titled “Update on Kickoff for 2026 City Budget Process” appeared as Item 7.

City Council approved Resolution 25-157 amending the 2025 General Fund budget related to inspection services; vote was 9-0.

The inspection-services budget amendment item was tabled from the Aug. 4, 2025 meeting before being approved on Sept. 15, 2025.

A finance director update reported the 2025 General Fund was running close to plan through August 2025, with spending slightly ahead of a straight-line pace but described as very close to budget overall.

General government budgets were not reviewed at this meeting; staff said the review would return at a future meeting.

During discussion, expectations were noted that shared revenue and highway aid will rise in 2026 and that property/liability insurance costs may drop; these were described as projections rather than finalized figures.

Staff reviewed ongoing changes to the proposed 2026 budgets, including staffing changes tied to retirements and a WDNR-required certified operator position.

Staff indicated benefits costs were increasing while overtime was decreasing in the proposed 2026 budgets.

Public Works capital in the proposed 2026 budget was described as significantly reduced, with no major equipment purchases.

The committee discussed eliminating Snow Watch as redundant and expecting police to help instead.

Finance staff presented a proposed 2026 General Government budget covering core city functions including council, clerk/HR, elections, technology, finance, city hall, and insurance.

Staff indicated total proposed General Government spending would decrease slightly from 2025, with a projected $120,700 drop in insurance costs attributed to changing insurance carriers.

Committees recommended approval of the full slate of 2026 utility budgets; the recommendation passed.

Staff proposed no rate changes for water or electric in the 2026 utility budgets.

Budget materials described operating losses in storm water, solid waste, electric, and telecommunications utilities.

Budget materials described water utility cash declining after debt payments.

The 2026 utility budgets included staffing and pay changes, including new wastewater positions tied to WDNR requirements and electric wage adjustments.

The 2026 utility budgets included maintenance and capital items such as leak detection equipment, a bucket truck delivery, meters, and security cameras.

Staff told the committee the 2026 General Fund budget was not yet balanced, with about $60,000 still needing to be cut and additional revenue still needed.

The committee voted to recommend shifting concession stand income into the General Fund rather than the Special Events Fund.

The committee reviewed capital projects totaling $3,388,000, including $2,176,318 supported by property taxes.

The committee discussed a proposed 2025 property tax levy intended to support the 2026 budget but did not make a recommendation; the levy figure was not settled because the General Fund budget was not yet balanced.

The Personnel and Finance Committee voted 2-0 to recommend the 2026 budgets and a proposed 4.05% property tax levy increase, with requested changes including $2,000 for cemetery flowers, removing a 2% library levy increase, and seeking $5,000 more from the Room Tax Committee.

City Council held the legally required three-call public hearing on the proposed 2026 city budget.

At the budget public hearing, Dean Hirvela raised concerns about stopping Memorial Day cemetery flowers tied to a separate flower fund.

At the budget public hearing, Katherine Dahlke questioned the tax increase and a reported 107% increase in miscellaneous revenue, and asked why departments that underspent still receive increases.

At the budget public hearing, a Library Board member urged approval of the library’s requested 2% increase to avoid service cuts.

The third call of the budget public hearing had no speakers.

Staff presented and discussed a draft 2026 budget described as $42 million with a proposed 3.8% levy increase; staff described using one-time items including land sales, debt premium, and a cell-tower payment to help balance the year.

Council discussion included whether to restore cemetery flower funding, whether to fund library services at the level requested by the Library Board, and how to handle special events funding if concession revenue is redirected to the General Fund; no final decisions were made during this discussion item.

Staff reported 2025 room-tax revenue was significantly below budget, with the decline starting in April; staff cited the NFL Draft as an example of an expected boost that did not materialize for Two Rivers.

Staff forecast the room-tax reserve fund would end 2025 at $62,299, below the commission’s $90,000 goal; the commission expected to revisit 2026 budget adjustments in Q1 2026.

Staff discussed a challenging 2026 budget and described potential service-level impacts including overtime reductions, fewer part-time hours for plowing and leaf collection help, and ending Snow Watch in 2026.

Staff warned of reduced funding for concrete/asphalt patching and winter supplies (salt/sand) and said the city will need close monitoring to avoid surprises.

City Council adopted the 2026 city tax levy at $5,745,073, described as a 4.05% increase; vote was 7-2.

City Council authorized carrying forward and using all allowable prior-year unused levy capacity for 2026; vote was 9-0.

City Council adopted all 2026 fund budgets totaling $41.7 million in appropriations and set the BID assessment rate at $1.77 per $1,000 of assessed value; vote was 9-0.

Agenda materials described cemetery flower funding as $2,700 in property tax support for one final year plus $3,300 proposed to be raised via a city-staff-launched crowdfunding campaign.

City Council approved a 2-year settlement/collective bargaining agreement with Two Rivers Police Local 13; vote was 9-0.

City Council adopted a settlement agreement with Two Rivers Fire Fighters IAFF Local 423 including scheduled wage adjustments and targeted updates to benefits, training compensation, and lateral hiring provisions; vote was 9-0.

Staff reported health insurance costs are trending higher for 2026; staff said they will keep evaluating whether joining the State health insurance plan would save money.

The committee reviewed unaudited 2025 operating results indicating the City ended the year with a deficit; spending was reported at 101.45% of budget and revenues came in short.

Staff attributed the 2025 deficit to multiple contributors including overestimated Public Works charges, Sandy Bay lot sale revenue no longer being recorded in the General Fund, an SRO fee collected in 2026 instead of 2025, and a lower utility PILOT payment tied to equalized value ratios.

The City Manager described a two-year “Shared Savings Incentive Program” pilot intended to encourage departments to save money.

Through March 31, 2026, staff reported the General Fund had about $3.61 million in revenues (28.0% of budget) and about $3.11 million in spending (24.2%), for a positive position of about $495,655; staff said this was about $139,000 better than the same point in 2025.

Through June 30, 2026, staff reported General Fund revenues at 38% of budget and expenditures at 49% of budget.

Staff reported a mid-year General Fund operating deficit of about $1.4 million, despite an improvement from the prior year.

Staff discussed storm-related costs being spread across multiple city funds.

Staff discussed the City’s IT switch to AIT, including a one-time onboarding fee and a three-year fixed contract running through March 2029; staff said it is expected to save at least $50,000 per year versus a full-time IT position.

Staff reported the City received a clean audit opinion; staff also reported the General Fund ended 2025 with an operating deficit and about a $339,000 drop in fund balance.

Staff reported the City’s government-wide net position increased about $2.6 million in 2025, with most of the increase tied to utility capital contributions and grants.

City Council accepted the findings of the City’s independent financial audit for fiscal year 2025, presented by CliftonLarsonAllen LLP.

Auditors reported a clean audit opinion and no material weaknesses for fiscal year 2025.

Auditors reported the City’s overall net position increased during 2025 and attributed the increase primarily to grant funding and capital investments.