Ely city officials are bracing for tough budget times ahead.
The budget picture, clouded by rising costs and uncertainties over future local government aid allocations from the state, prompted council action to deny a request from the city’s historic preservation commission (HPC) to spend $2,500 next year on art for the new trailhead building.
Minutes from the city’s budget committee, included in Tuesday’s regular meeting packet, indicated that the city’s property tax levy could climb by 6.07 percent, or $140,300, next year.
If that number holds, it would come on top of a seven percent levy hike that was approved for 2025.
Mayor Heidi Omerza, who is well connected with other city leaders statewide through her work with organizations such as the League of Minnesota Cities, told the council she’s worried not only about the upcoming budget cycle but what might be ahead in 2027 and 2028, given projections for potential state budget deficits.
Amid questioning by council member Angela Campbell, council member John Lahtonen defended the decision to deny the HPC’s request.
“We don’t have any money,” said Lahtonen. “We’re asking our department heads to dig deeper and make more cuts. LGA was cut. All of the remaining money that we have to put in is coming from the taxpayers.”
The decision to deny the $2,500 for artwork was defended by Omerza, both on budget and procedural grounds.
“We’re concerned about the budget for next year and I personally am very concerned about the budget the next two years after that,” she said.
Omerza added she thought about how art was provided for facilities such as the library and added, “I think we need to be in the space, we need to see how the space is going to be used, how it’s going to be protected, how it’s going to be secured.”
Council member Al Forsman agreed and said “the building right now has a beautiful look to it. I’m sure there will be a time where somebody is going to recommend something. Then we’ll have to decide whether we accept it or not. I do think it’s very possible we might have more coming to us than we actually want. At this point it wasn’t something that HPC, I don’t consider the group that’s going to outfit our buildings.”
The denial was supported 6-1, with council member Emily Roose opposed.
“It’s a little interesting that you’re denying it before the whole budget process has been completed,” said Roose. “And I was under the impression that the trailhead building itself came in under budget and there was extra money for furniture.”
This year, the city has a general fund budget of $4,362,40. LGA funds make up 72.1 percent of general fund revenue at $3,152,500, with property taxes funding another $689,600, or about 16 percent.
The city’s levy for 2025 was $2,310,200, an increase of just over seven percent.
The council’s budget committee, together with department heads, are currently working on the 2026 budget with a preliminary levy required to be set during September.
In other business Tuesday, the council:
• Renewed the contract of Klun Law Firm, which has provided legal services to the city since 1995.
Terms of the two-year deal include a yearly retainer of $62,000, which is unchanged from the contract for 2024 and 2025, with the hourly rate for extraordinary cases rising by $5 to $130.
The retainer covers standard tasks ranging from criminal prosecutions to drafting ordinances, assistance in union negotiations and assistance to the city council, administration, department heads and boards.
Non-standard or extraordinary cases include lawsuits, real estate transactions and economic development projects.
• Agreed to submit the water supply project for potential state bonding assistance.
• Renewed the licenses of numerous cannabinoid retailers.
• Approved in-kind services for the Sept. 19 Northern Lights 5K Glow Run.
• Appointed Anna Heil to a seat on the planning and zoning commission.
• Authorized the city to apply and accept funds from a housing grant program for the rehabilitation of existing townhomes.
• Approved a proposal for a geotechnical evaluation for the workforce housing apartment complex.
• Granted temporary liquor licenses to the Ely Winton Rod and Gun Club for upcoming weddings at the Miners Dry Building.
• Approved membership dues of $6,305 for the Coalition of Greater Minnesota Cities.
• Approved a residential rehabilitation loan for Taylor Brannock and Austin Neilan.
• Was briefed about various activities of Boundary Waters Connect from director Lacey Squier.
• Heard from Whitney Woods, marketing director of the Ely Tourism Bureau.
• Got updates from librarian Rachel Heinrich about activities, including a recent overnight sleepover at the facility.
