Owatonna residents ask for bigger tax cuts

While Owatonna council members appear to have stepped back from a 13% property tax levy increase, residents who spoke during last week’s Truth in Taxation hearing believe they haven’t cut enough.

The state requires all municipalities with 500 or more residents to hold the hearings after officials have set a preliminary tax levy and before passing the final number. Dollars raised through property taxes levied on residential and business properties account for nearly 60% of the city’s operating budget.

Before opening the hearing, council president Kevin Raney said the 2026 levy will cover “rising operation expenses, staffing, equipment, inflation and general city services.” While he said it will not be used to pay for large capital projects, some residents pointed out that the levy does cover payments on debt.

In discussing the preliminary levy, City Administrator Jenna Tuma said the 13% increase included preparing for debt payments on new police and fire buildings, which have an estimated $61 million price tag.

Raney also reminded residents that concerns about property valuations are handled at county level and said officials will decide the final levy during their Dec. 16, 7 p.m., meeting.

Tuma provided a quick overview of what the tax levy covers. Along with serving 27,000 residents and maintaining 90 buildings and 139 miles of roads, the list included:

• 43,488 police department calls
• 600 fire department calls
• 900 acres of park land
• 31 miles of paved and natural trails
• 2,000 building permits 2025
• 199,296 items circulated by library

“I share this because we have a lot of pride in Owatonna and our community. We take a lot of pride in our work,” she said.

Tuma also explained the budget process starts in February, when council members determine the city’s priorities for the year. For 2025-2027, those priorities include public amenities, economic prosperity, financial security, being a premiere employer, and our neighbors. The budget, she said, is based on those priorities.

“This process is nine months long. It includes up to 10 public meetings and over 20 hours of public time shared, and numerous hours behind the scenes putting this budget together,” Tuma said.

Since the preliminary levy was set in September, the proposed levy increase has dropped to 9.9%, with about $600,000 cut from the budget. Pay-as-you-go capital projects took the biggest hit, dropping from $820,000 to $249,000. The fund take a “basic replacement focus,” finance director Emily Burns said, and will cover a city-wide LED lighting update, Brooktree pergola replacement, airport and parks paving, and an annual technology replacement

Many of those projects are phased in to minimize the impact on the levy, she said.

As with other governments, the city is seeing increased costs for supplies and materials–everything from concrete to road oils, Burns said. Also, there are extra costs associated with Minnesota’s new paid family leave law and negotiated increases in employee compensation.

Assuming no change in 2026 market value exclusion limits, Burns said, with a 9.9% levy increase, a home valued at $275,000 should see a tax increase of $51 or $4.26 per month on the city’s portion of the tax bill.

That’s too much for Debra Vandal, who said property taxes cost her two months of Social Security payments. Among other things, she suggested getting rid of the city’s water park.

“This hurts senior citizens," she said. "It’s hard, it’s really tough to live on a fixed income.”

Sarah Sanchez told officials they’re not just managing dollars, “you serve the people who earn them.” She encouraged them to exhaust every alternative before reaching into taxpayer pockets again” and recommended a state-run audit, more transparency, and more public-private partnerships.

Melissa Zimmerman said the city is holding 53%–about six months’ worth–of its general fund budget in reserves, which is above the state’s recommended range. Residents, she said, don’t have half a year of savings to fall back on. She asked the council to lower the levy and pause major expenditures.