August 22, 2026

Dear Sunfish Lake Residents,

2027 Property Taxes: What Residents Should Expect

 I want to provide a clear explanation of the budget pressures affecting 2027 property taxes—and the steps the City has taken to limit the impact on residents.

 A typical Sunfish Lake property-tax bill is made up of levies from several government bodies. The three largest are Dakota County, the City of Sunfish Lake, and Independent School District 197. Together, they account for approximately 96% of a typical property-tax bill.

This means that even though the City is responsible for less than one-quarter of the typical bill, residents’ final property-tax bills will also be substantially affected by County and school-district decisions.

 Why the City’s 2027 Preliminary Budget Increased

Several necessary expenses initially created significant pressure on the City’s 2027 budget.

 Road maintenance

The City’s 2027 Capital Improvement Plan includes $90,000 to chip seal Salem Church Road. This is $56,000 more than the $34,000 included for road work in the 2026 budget.

 Sunfish Lake has historically budgeted for road work as projects arise, rather than collecting and holding a separate road-improvement fund. Residents previously expressed a preference for this approach: it avoids collecting funds years before they are needed and allows residents to retain the use of their own money until road work is actually scheduled.

The planned road expenditures are expected to decline substantially after 2027:

Required Comprehensive Plan update

Metropolitan cities must update and submit a Comprehensive Plan to the Metropolitan Council every 10 years. See Minn. Statutes 473.864 and 473.858. This required planning process is extensive and costly.

The City initially received a proposal of $57,531 for this work. Later in this letter, I explain how we reduced the 2027 budget impact of that expense.

Ongoing service costs

Over the past two years, the City has conducted a comprehensive review of its budget. That work produced meaningful tax reductions while many other cities were increasing taxes.

The City now operates with a lean and efficient budget. However, normal inflationary increases remain unavoidable, particularly for staff, police, and fire services—major components of the City budget. 

The preliminary budget also included:

·        An additional $18,000 to plow after 1-inch snowfalls rather than the City’s long-standing 2-inch threshold

·        $7,000 for trail maintenance at Musser and Harmon Parks

Taken together, these items initially increased the City’s preliminary 2027 budget by $154,203.08—approximately a 19% increase over the prior year.

 Other Major Tax Pressures

The City’s budget is only part of the picture.

Dakota County has indicated that it may increase its property-tax levy by approximately 18% to 21% on the County portion of residents’ tax bills. The County has explained that the increase is driven in part by state and federal cost shifts to counties. Read the Full Presentation: Dakota County Budget and Property Tax Open House information.

 Independent School District 197 is also facing significant financial challenges. Superintendent Peter Skog has advised that the District is confronting an estimated $2 million budget deficit for 2027, which could otherwise result in the loss of approximately 100 teaching positions. Two Rivers High School has been ranked in the top 5% of all public schools in the last couple of years and cannot afford the loss of teachers to maintain the excellence of their programs. The District may seek a levy increase comparable in dollar impact to the anticipated County increase. Read the Full Presentation: Independent School District 197 Project Levy Summary .

Based on the currently announced or assumed increases, the estimated effect on a typical Sunfish Lake property-tax bill is:

These figures are estimates, not final tax bills. Individual tax bills may differ because of changes in property values, property classification, tax credits, state programs, and levies adopted by other taxing jurisdictions.

Steps Taken to Reduce the City Levy

Recognizing the potential impact on residents, the City revisited the preliminary budget and identified several ways to reduce the 2027 levy.

 These reductions include the following:

·        Contract services. The City reviewed each contract-staff budget using actual experience from recent years. Our contract professionals worked with the City to reduce proposed budgets to the essential level needed to provide required services while maintaining an appropriate allowance for unforeseen needs.

·      Snowplowing. The City removed the proposed $18,000 increase for plowing after 1-inch snowfalls. We will continue the long-standing practice of plowing after 2-inch snowfalls, which has served the community well and generated relatively few complaints. It did not seem prudent to increase it in a year of higher taxes.

·        Comprehensive Plan costs. Our City Planner revised the work plan so that $15,000 of preliminary work can be completed within the 2026 budget. The remaining $42,531 will be divided between 2027 and 2028. This reduces the 2027 cost from $57,531 to approximately $21,266.

·        Use of reserves for road work. After consulting the League of Minnesota Cities regarding prudent reserve levels, the City determined that Sunfish Lake has strong reserves. The City can use reserves to fund $90,000 of the 2027 road expense while retaining substantial reserves for future needs and emergencies. This decision significantly reduces the 2027 tax impact.

Our Commitment

The City Council, City staff, and our contract professionals have worked together to find responsible ways to reduce the 2027 tax burden without compromising essential services or the long-term condition of our roads and community.

In our August 18, 2026, Council meeting, the Council directed our Treasurer to prepare proposed 2027 budget options for our September 2027 Council meeting using a substantial amount of our surplus to insure that instead of a 19% increase for 2027 taxes, we will have a decrease in the City’s portion of those taxes, helping to offset as much as is prudent of the expected 10.27% property tax increases of Dakota County and the School District.

 The financial pressures facing residents are real, particularly because the County and School District comprise more than 70% of a typical Sunfish Lake property-tax bill. At the City level, however, we have carefully reviewed every practical option and taken meaningful steps to reduce the proposed increase. Thank you to everyone who contributed ideas and worked collaboratively to protect the financial interests of Sunfish Lake residents.

On September 8th, the City Council will be considering the proposed budget and setting a not-to-exceed tax levy for collection in the year 2027.  On December 8th, the City Council will be holding special truth-in-taxation meeting where the final tax levy will be set for 2027.  You are encouraged to attend both meetings.

You can advise neighbors this will also be posted on the SFL website.

Warmest regards,

Mayor Dan