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ARDEN HILLS SPECIAL CITY COUNCIL — SEPTEMBER 29, 2025 3 Councilmember Weber commented a lot of the expenses for the City are unavoidable and without building towards capturing the correct amount of funds, the City would never have enough funding in order to have 50% of the general fund in reserves. He stated the City's goal is to get to 50% and he believed this was something the City should strive to achieve. He questioned if the Mayor believed the 50% should be lowered. Mayor Grant indicated he did not believe the 50% should be lowered. However, he understood the increases were part of the City's operating costs and were contractual. He stated his previous point was, the larger the levy was based upon the previous year, it becomes a larger number in order to maintain 50% of the general fund. He requested that Council consider this when making a decision. Councilmember Weber reviewed the tax history table. He requested further information on the practical implications of the values in the percent change column. Finance Director Yang described how the change in tax rate percent was calculated. She reported this calculation was based on the change in property tax values throughout the city. Councilmember Weber indicated the percentage changes were indicative to inflation, when it came to housing values. He stated as housing values rise, by not balancing this with the levy, the City runs the risk of other items also inflating. He commented on how he did not want to see a shortfall in the PIR Fund in the future. He was of the opinion there had been severe inflation over the last number of years, and the City did not address it until 2024 for the 2025 levy. Councilmember Rousseau asked when the final levy has to be set. Finance Director Yang reported the final levy had to be set by the end of December. Councilmember Rousseau addressed the public, stating that these percentage changes can be scary when it came to housing values. She discussed how 2026 may be a higher increase when it comes to the tax levy and explained how the median value home would be impacted by a 16.99% and 21.06% levy increase to help residents put the relational amounts in perspective. Mayor Grant stated the State of Minnesota was not on a mill rate when it came to property taxes and the tax levy. He noted every home could go up 50% and businesses can go up an equal amount without impacting the tax levy. He explained if everyone's property value increased at the same proportion then there would not really be an impact. He indicated the City determines its financial needs and this is apportioned back based on a homes value. He reported there was a difference in the budget of $600,000 from 2023 to 2024, which would require an additional $300,000 to be reserved. He noted from 2024 to 2025 there was a difference of $700,000, which would require an additional $350,000 to be reserved. Based on the presented budget, the City could have a $1 million increase, which would require $500,000 to be reserved. He did not believe the levy increases were strictly inflationary but rather had to do with increased spending. He stated the Ramsey County Sheriff's contract had increased by $343,000 and the Lake Johanna Fire Department's budget had increased by $159,000. These were sizeable increases that were impacting the budget that did not correlate with the rate of inflation. He stated the Council could not have projected these increases, nor would the Council compromise safety for the residents of Arden Hills.