Dear Sunfish Lake Residents,

Update on 2027 Property Taxes

I am pleased to share that, at its September 8 meeting, the City Council voted 4–1 to allocate $300,000 of City reserve funds to the proposed 2027 budget.

This action changes the City’s preliminary property-tax levy significantly. Rather than the previously anticipated 19% increase in the City’s portion of property taxes, the Council-approved preliminary levy represents an approximate 33% reduction from the original preliminary levy.

Importantly, the levy approved by the Council is a not-to-exceed levy. When the Council adopts the final 2027 budget in December, the City levy cannot be increased above this amount. It may, however, be reduced further.

The proposal also includes an additional $18,000 to provide snowplowing after 1-inch snowfalls, rather than under the prior contracts that required 2 inches of snowfall before plowing. Residents are encouraged to share their views on this service level with Council Members. If the community prefers, this expense could be removed or adjusted when the final budget is considered in December.

As noted in my August 22 message, Dakota County and Independent School District 197 are expected to have substantial increases in their portions of the 2027 property-tax bill. The Council’s action to reduce the City levy is intended to help offset some of those increases for Sunfish Lake residents.

Estimated City Tax Savings

At the September Council meeting, Treasurer Char Stark presented projections for “Scenario 5,” the option adopted by the Council. By applying $300,000 in reserve funds to offset 2027 budget expenditures, the estimated reduction in the City portion of property taxes would be:

These figures are estimates and reflect the City portion of the property-tax bill. Individual tax bills will also depend on valuations and levies set by other taxing jurisdictions.

Maintaining Financial Stability

Before recommending the use of reserves, I sought guidance from the League of Minnesota Cities concerning appropriate municipal fund-balance levels. Lisa Sova, Assistant Finance Director – Member Services responded to me on August 7, 2026. In part she stated:

“The Office of the State Auditor (OSA) recommends cities maintain an unrestricted fund balance of 35% to 50% of general fund operating revenues, or no less than five months of regular operating expenditures, to ensure adequate cash flow and financial stability….

Fund balances also serve as rainy day funds to address emergencies or unexpected revenue shortfalls and can be saved for future capital projects to reduce debt issuance. Some cities opt to carry a higher fund balance for these reasons. Maintaining healthy fund balances positively impacts a city’s bond rating, which lowers borrowing costs and ultimately saves taxpayers money. A strong fund balance signals sound fiscal management and financial health to investors and rating agencies.”

Even after applying $300,000 in reserves to the 2027 budget, the City is projected to retain an estimated General Fund balance of $1,398,202 at the end of 2027. This represents a General Fund balance of 160% of our annual budget.

This approach allows the City to provide meaningful property-tax relief while preserving a strong reserve position for emergencies, unforeseen revenue changes, future capital needs, and sound long-term financial management.

Please feel free to contact your Council Members regarding the proposed snowplowing service level or other elements of the 2027 budget. This update will also be posted on the City of Sunfish Lake website.

Warmest regards,

Mayor Dan