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Pipestone City Council members during a special Sept. 25 meeting approved a preliminary 2026 property tax levy of $2,962,645, which would be a 5.2 percent increase over the 2025 levy. It includes a general tax levy of $1,777,549 and a debt service levy of $1,185,096.
City Administrator Deb Nelson said the budget includes a 5 percent cost of living adjustment and no increase for insurance for employees. The cost of living adjustment could potentially be lower based on the Social Security cost of living adjustment, which is what the city bases it’s adjustment on. Nelson said the Social Security adjustment won’t be known until mid-October and, according to information presented at the meeting, it’s expected to be around 2.7 percent. Nelson said that would reduce the city’s 2026 levy increase to around 4.3 percent.
Councilor Scott Swanson said capital outlay requests could be reviewed as a possible way to reduce the levy further. The City Council could reduce the preliminary levy amount when it approves the final levy and budget in December, but not increase it.
The preliminary levy would pay for about 19 percent of the projected budget of $15,752,087, which is about 10 percent higher than the 2025 budget. Local government aid from the state of $2,759,371 would pay for about 18 percent of the projected budget.
The largest share of projected expenditures is $3,169,708 for general fund expenses. That’s followed by projected water fund expenditures of $2,079,827, airport fund expenditures of $2,005,184, liquor store expenditures of $1,912,687, sewer fund expenditures of $1,592,767 and park and recreation expenditures of $1,178,530.
The annual truth in taxation public meeting is scheduled for Monday, Dec. 1 at 6:30 p.m. State statute requires that such meetings be held prior to the final budget and levy being approved, and that the budget and levy be discussed and public input allowed at the meeting.
Law enforcement costs
This year’s budget includes a change in how the city pays Pipestone County for law enforcement services. Instead of the city paying a portion of the sheriff’s budget and a portion of the dispatch budget as in years past, it will pay a per capita rate as other cities in the county do. For 2026, that rate will be $240 per city resident. Using the 2020 census total of 4,215 people, that adds up to $1,011,600, which is $42,121.69 less than the city paid for law enforcement services in 2025. The new law enforcement agreement is for a five-year term rather than one year, as had been the case with previous agreements, and the per capita rate will increase by 2 percent each year.
“It puts a cap on it, it makes it simple for the county, it makes it simple for the city for budgeting purposes, it shows the Sheriff’s Office that we have a commitment to them, and that we want them to be able to budget and proceed the next five years knowing that they are part of this agreement too,” said Mayor Dan Delaney during a special Sept. 19 City Council meeting to discuss the new agreement. “I think it’s a win-win for all parties involved, really.”
The County Commissioners approved the agreement on Sept. 22. The City Council has not yet taken action on the agreement, but approved the cost.