It takes hard work to pull an entire city out of debt. But in recent years, Crystal’s approach to budgeting, though unpopular with some residents, is working.

That’s the consensus as the budgeting season moves along through this summer and fall, according to city staff, with the 2027 city budget and tax levy to be approved and sent to the state in December.

Early forecasts showed a 12.06% increase, but city staff have slashed it down to 9.28%, a $802,937 reduction from the original proposed 2027 budget. New details were discussed at the Aug. 6 budget study session.

Driving costs

Whether or not to create a new position in the police department is still up for debate. A new co-responder would cost $100,000 in salary and $60,000 in benefits, and the city did not receive initial grant funding to pitch in for the position.

Council Member Forest Eidbo suggested a hiring freeze to keep cost burdens as low as possible for residents. But other members of the council shared some trepidation and were more inclined to include the position for now.

Members have some time to decide. The council will set the preliminary budget is set on Sept. 15. After that, the budget levy cannot go up, only down, before a final vote in December.

If the city cuts the co-responder role for 2027, the budget levy increase would be 8.56%.

There are also significant increases for internal service funds for IT, the building fund and the fleet fund. Those three areas alone account for $1,055,532, or half of the levy increase.

“In the past, these funds were drastically underfunded, so in order to fully fund those areas, we have planned to make increases each year,” City Manager Adam Bell said over email. “Like all the funding gaps we have, once they are fully funded, we will be able to simply maintain them instead of needing to catch up.”

There are also costs associated with elections. With Sen. Amy Klobuchar running for Minnesota governor, there could be a special election to fill her empty seat in the U.S. Senate. That would cost $70,000 and is included in the budget in case Klobuchar is elected in November.

Cutting costs

A decrease in the department budget for mayor and council could make a dent of more than $42,000. The net reduction would total nearly 19% of the department’s budget, largely by cutting costs on city manager evaluations and $46,000 in city insurance.

The last adjustment to council and mayor salaries was a 3% increase, based on the June 2024 Consumer Price Index report. In 2026, Mayor Julie Deshler will earn $12,173 in her role, and council members will receive $9,364.

The current ordinance would bump salaries up by 3.5%, a couple hundred dollars more for 2027. Eidbo suggested freezing the council salaries in 2027 as well as the hiring freeze. The council salaries are increased by the CPI report that comes out in July, but with an economy constantly changing, it may be time to revisit that ordinance now that the state repealed the law governing compensation limits in city municipalities.

“I recommend that we also clarify how the CPI is determined, as the ordinance only states that the adjustment must be determined before December 1 of even-numbered years,” Bell said, “However, we need a number by July to finalize the budget by August/September… CPI can vary greatly depending on the economy, and the timing of the adjustment may not accurately reflect the previous 24 months. It only accounts for the previous 12-month average.”

Bell told the Sun Post he plans to see what surrounding city councils and mayors earn for salaries and to let Crystal’s governing body decide what direction to go. But at this point, he said, the group of elected officials is likely to maintain the small increase for next year’s salaries.

The parks budget is also slated to decrease by $87,000 because of staff’s recommendation to pause the Bassett Creek Park revamp project, which spread $5 million over the coming years.

Diversifying revenue

Crystal will see some revenue because of its joint forester and natural resources coordinator position shared with Brooklyn Center. This position was approved for 2026 and was supported by grants.

Franchise fees could be on the horizon for Crystal, with a $6 fee on gas and electric utility bills, which is part of the 2025–2027 Strategic Plan. The council directed staff to pursue the $6 per month franchise fee while reducing the street improvement tax levy, which would bring the estimated overall tax levy to 8.37%, Bell said. The franchise fees will be completely dedicated to the Street Improvement Fund instead.

The long debt game

Next year will be another year of tackling Crystal’s debt with plans to eliminate it by 2031, while also replenishing the fund balance back to 40% for expenditures instead of doing projects through bonding. The 2027 levy, in an effort to ease burden on taxpayers, will somewhat plateau the target fund balance at 35.16%, a slight dip from 2026’s fund balance percent of expenditures being 35.42%.

With easing pressure on residents to fix debt in 2027, “That is allowing us to encourage budgeting better as a city,” Council Member Taji Onesirosan said.

“We were saying this last year; it’s going to hurt a little bit, but because of our discipline and how we’re effectively budgeting, we’re going to continue to ease the pressure,” Onesirosan said. “That’s what we expect over the coming years.”

The public’s grace with tax increases can also appear in election seasons. “There’s some risk to the long game, Bell suggested. “If a new council majority comes in and starts cutting all this stuff, that’s not going to look good for the credit,” he said. “On a political whim, everything can get thrown out.”

“If there were a bunch of challengers (in the upcoming election) because the public generally was really upset or really unhappy with the way things were going,” Bell said, a new council could interfere with the ambitious budgeting schedule for the next decade. “That was one of my fears.”

But there’s room for optimism as the budget levy increase went from over 12% to nine or eight over the summer. Tax increases don’t feel good for anyone, but “we’re making meaningful progress,” Onesirosan said. “The plan is working. Trust us.”