2026 Budget for the City of Shakopee

2026 Annual Budget FOR THE CITY OF SHAKOPEE, MINNESOTA

Our mission is to deliver high quality services essential to maintaining a safe and sustainable community. We commit to doing this cost effectively, with integrity and transparency.

2026 City of Shakopee Annual Budget

2026 Shakopee City Council

Mayor

Matthew Lehman Angelica Contreras

Councilor Councilor Councilor Councilor

Jay Whiting Jim DuLaney

Jesse Lara

City of Shakopee Department Heads

City Administrator

William H. Reynolds Chelsea Petersen Nathan Reinhardt

Assistant Administrator

Finance Director

Police Chief

Jeff Tate

Fire Chief

Joe Simon Alex Jordan

City Engineer

Public Works Director

Bill Egan

Planning and Development Director

Michael Kerski Kelsi McNutt

Park and Recreation Director

Contributing Staff

Accounting Manager

Melissa Schlingman

Our Vision Shakopee is a place where people want to be! A distinctive river town, with a multitude of business, cultural and recreational opportunities in a safe, welcoming, and attractive environment for residents and visitors.

Our Mission Our mission is to deliver high quality services essential to maintaining a safe and sustainable community. We commit to doing this cost effectively, with integrity and transparency.

Our Values Integrity We say what we mean, and we do what we say Best for the Community We work on behalf of community interests, not individual interests Accountability We are committed to achieving results and accountability for our actions Innovation We strive to creatively improve our services and our community Welcoming, Open to Difference We are receptive, we listen, and we are open to the differences of others Fair and Consistent We are fair, consistent, and respectful in our service to the public

Fun We enjoy what we do, and we have fun doing it

Table of Contents

Introduction: Budget Overview Message ............................................................................................................................................... 1 Executive Summary ...........................................................................................................................................................16 Organization Highlights ...................................................................................................................................................21

Community Profile ...................................................................................................................................................................23

2026 Budget ...............................................................................................................................................................................26

General Fund ............................................................................................................................................................................29 General Government .........................................................................................................................................................37 Public Safety .........................................................................................................................................................................51 Public Works .........................................................................................................................................................................63 Recreation .............................................................................................................................................................................75 Miscellaneous ......................................................................................................................................................................81 Special Revenue Funds...........................................................................................................................................................86 Debt Service Funds ............................................................................................................................................................... 102 Capital Projects Funds ......................................................................................................................................................... 114 Enterprise Funds .................................................................................................................................................................... 123 Internal Service Funds ......................................................................................................................................................... 134 Appendix: Financial Management Policies .................................................................................................................................. 147 Employees by Function ................................................................................................................................................. 154

BLANK

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To: Mayor and Council Members From: Nate Reinhardt, Finance Director Cc: Bill Reynolds, City Administrator Date: December 2, 2025 Re: 2026 Property Tax Levy & Budget

Background Each year the city must prepare a budget and property tax levy for the following year. Staff analyzed revenues, expenditure information and initiatives to prepare a budget and levy for your consideration. From providing fun recreation programs and beautiful parks to ensuring safe neighborhoods, providing high-quality services enhance and protects people’s lives. Responsible fiscal management also builds the foundation for the city to run smoothly and provide effective, innovative programs and services while keeping in mind ways to evolve to meet future expectations and demands. Decisions are made with the future in mind to ensure the city’s ongoing ability to provide high quality services at a reasonable price. Shakopee continues to remain in an extremely strong financial position. The city’s AA+ long term credit rating reflects the rapidly growing local economy, strong reserves, manageable debt burden and strong financial management practices and policies. The city maintains a very diverse tax base across all sectors, entertainment, industrial, commercial and a range of housing options. The city continues to place an emphasis on long term financial planning including a long-term financial plan, a 15-year capital improvement plan, establishment of internal service funds, and financial projections of our various funds. Staffing for Adequate Fire and Emergency Response Grant Award (SAFER) The City accepted a federal SAFER grant in October 2025 to hire twelve new full-time firefighters beginning March 2026. The SAFER grant provides funding to offset the initial costs required to shift to a career department with a majority full-time staffing model. The total grant award is $2.63 million over a three-year period and required a progressive match from the city: 25% in year 1, 25% in year 2 and 65% in year 3. City Council approved a budget amendment to assign fund balance to cover the 2026 cost to the City. Since the grant was awarded after the preliminary levy and budget was adopted, the additional costs and staff have not been reflected in this budget document. Levy Request & Impact The proposed 2026 levy is $28,214,480, which is an increase of $1,470,430 or 5.50 percent over last year, and a EDA levy of $550,000, which is an increase of $50,000 from last year. For the median value home, whose property value increased from $350,700 to $361,300 (3.02 percent), this equates to an increase of $63 or (6.79 percent) annually in city property taxes.

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The breakdown and comparison of the proposed 2026 levy is as follows: Summary of Levy Changes – 2026 Budget

City of Shakopee Levy Analysis December 2, 2025

2026 Preliminary

Increase/ (Decrease)

2025 Final

% Change

City Levy

General Fund Abatements

$ 23,235,050

$ 24,405,480

$ 1,170,430

5.04% 0.00% 25.00%

120,000

120,000

-

Capital Improvement Levy

1,200,000

1,500,000

300,000

Debt Service

2016 Abatement

2,189,000

2,189,000

- -

0.00% 0.00% 0.00%

2022A Improvement

-

-

Total Debt Service

2,189,000

2,189,000

-

Total City Levy

$ 26,744,050

$ 28,214,480

$ 1,470,430

5.50%

$

500,000

$

550,000

$

50,000

10.00%

Shakopee EDA Special Levy

Total City and EDA Levies

$ 27,244,050

$ 28,764,480

$ 1,520,430

5.58%

A summary of changes, in comparison to 2025, impacting the property tax levy are as follows with detailed information on each section following the summary. The amount shown in red parentheses represents decreases in the property tax levy, as an example an increase in fee revenues would result in less property tax needed to fund those services. Description Levy Impact Revenues (increase) $ (2,133,480) Transfers from other funds (increase) (24,000)

Expenditures :

Wages & benefits Operating expenses Internal rent changes One-time adjustments Capital Improvement Levy

2,100,700

961,010 359,200 (93,000) 300,000

Debt Service

-

Change in property tax levy

$1,470,430

The next few pages provide a breakdown of the summarized changes shown in the table above.

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Revenues The city is projecting an overall net increase of $2,133,480 in non-property tax revenues for the 2026 budget a summary of revenue changes are as follows with explanations below:

Description

Change

Contracted public safety services (offset with expenses)

$616,500 450,000 331,700 150,000 122,000 100,000 75,000 75,000 55,000 45,000 37,000 25,000 25,000 25,000 25,000 71,280 (35,000) (60,000)

Building permit revenues Community Center revenues

Engineering fees – private development

Restaurant licenses and inspections (offset with inspector wages and benefits)

Police state aid

Municipal State Aid (MSA) maintenance funds

Interest income (General fund)

SPU pilot fee Fire state aid

SandVenture revenues Township fire Agreements Tribal contribution Ice Arena revenues MS4 administration fee Other (net adjustments) Cable franchise fees State building official grant

Change in Revenues

$2,133,480

Several organizations contract with the Shakopee police department to provide services during the year. With the addition of concerts at the amphitheater we have increased contracted revenue by $616,500. This revenue is offset by budgeted increases in staffing overtime and contracting with other agencies to fulfill these agreements and related supplies and equipment. The city’s building permits have been strong over the past few years with an influx of commercial and residential development. The city has historically been conservative when forecasting and budgeting development and related building permit revenue. The city’s 2026 forecast for building permit revenue includes a $450,000 increase in budgeted building permit revenue. In total, the city has budgeted $3.88 million in building permit related revenues. Community center revenues have been increased to reflect proposed fee increases for 2026. The recreation department has created a comprehensive revenue policy and these fee adjustments will align with that policy. The community center will continue to remain one of the most affordable options. Engineering fees related to private development were increased by $150,000 based on continued development. The City contracts with a third party to provide construction inspections services for private development, the increase offsets those contracted costs. The city is proposing to add a dedicated health inspector to ensure the safety and cleanliness of our 12 hotels and 72 restaurants. New licenses and inspection fees are budgeted at $122,000 to offset the cost of the new position.

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Transfers to the General Fund Transfers from other city funds to the General Fund help pay for operating costs.

Description

2025

2026

Change

Public safety fund (patrol officer reimbursement)

$126,000 350,000 400,000

$100,000 (26,000)

Self-insurance fund

350,000 400,000 50,000

Sewer/storm water (allocation of admin overhead)

EDA (allocation of admin overhead)

-

50,000 $24,000

Change in transfers

The city received $1.99 million in one-time public safety aid in 2023 which was placed in a separate Public Safety Aid special revenue fund. Funding was provided in 2024 and 2025 to pay for a portion of the cost of two additional officers. These positions weren’t hired until fall of 2024 and as a result, not all funding has been utilized. Approximately $100,000 remains in the fund which is proposed to be utilized with the 2026 budget. Staff is proposing to utilize $350,000 of fund balance from the city’s self-insurance fund to offset costs associated with an increase in the employer share of health insurance premiums (this is the same amount that was used for the 2025 budget). The city continues to explore a potential implementation of a Scott County health insurance pool, a partnership with Scott County and cities, that would increase the plan participants and save money over the long-term. Funding of $600,000 was set-aside initially in 2017 as the city explored their own self-insurance options. A new recurring annual transfer from the EDA to the General fund in the amount of $50,000 is included in the 2026 budget. Similar to the city utility funds (sewer and storm water), the EDA receives administration support from general fund operations including the city council, finance, information technology, communications and human resources. From a financial standpoint, the administration allocation would better reflect the full cost of EDA operations. A corresponding $50,000 increase in the EDA levy is being proposed, resulting in no impact on the EDA operational funding.

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Expenditures A number of factors will impact the cost of operations in next year’s budget.

The General Fund expenditures are budgeted to increase in total by $3,327,910. The expenditures have been categorized in this section as wages and benefits, operational (on going) expenditures, rent (equipment and capital replacement) and one-time adjustments. Wages and benefits Description Change Cost of living adjustment – 3% (3.5% PW Union) $792,000 Pay step changes 388,000 Compensation study implementation (non-union) 320,000 Public safety OT (offset by contracted revenue) 197,000 Health inspector (New) 121,000 Health Insurance – 8.3% premium increase 99,000 Elections judges 94,000 MN Paid Leave (employer contribution) 93,000 Recreation part-time 58,000 Clerk Administrative Assistant (part-time to full-time) 54,000 Fire part-time 51,000 Fire Inspector added July 2025 (half year impact) 49,000 PT Marketing Specialist (split Communication and Rec.) 39,000 Other (net adjustments) 40,700 Workers compensation – reduced rates (295,000) Change in wages & benefits $2,100,700 Wages and benefits account for nearly 70% of the City’s General Fund costs. The City has three unions (Patrol, Sergeants, Public Works), all three union contracts were revised during 2024 and cover a three year period (2024-2026). The 2026 budget has been built with the assumption that the Patrol and Sergeants unions and non-union wages will see an equivalent 3.0 percent cost of living adjustment. The Public Works union includes a 3.5 percent cost of living adjustment. Across all employee groups the cost of living adjustment amounts to an increase of approximately $792,000. The city maintains pay plans for all employees that include step increases on employee anniversary dates. Budgeted step increases amount to $388,000. The city recently completed a market compensation study for all non-union employees. The goal of the study was to evaluate wages of non-union full-time staff with our peer comparable cities (Maplewood, Coon Rapids, Lakeville, Roseville, Blaine, St. Louis Park, Golden Valley, Inver Grove Heights, Burnsville and Savage). The City Council has provided guidance that employees should be compensated at the salary mid-point of our comparable cities. The study showed our pay plan is behind market averages and included several positions that were significantly behind the average wage of similar positions. As a result, the following modifications have been proposed to the non-union pay plan:

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1) Proposed 1% market adjustment 2) Proposed creation of an additional step at 2 percent above the final step for each pay grade 3) Elimination of step 1 for grades 200 through 240 (which places the number of steps in line with other pay grades) 4) Positions that are six percent or more below the market will be adjusted up to a newly created “half” grade. This grade will be inserted at the mid-point between the current grade and next higher grade. These new grades impacted 18 positions (21 employees). These pay plan adjustments will allow the city to remain competitive, re-align positions that were out of the market average and still retain our current pay plan framework. The total budget impact of these changes amount to $320,000. The following chart provides a comparison line showing the current wage, market average and proposed wage adjustments for grade mid points.

The 2026 budget currently includes an increase in health insurance premiums of 8.3 percent. This increase along with changes in employee plan elections calculate to an increase of $99,000. We have seen a number of employees move from family to single coverage or from low to high deductible options. The city has seen premium increases of 16.7 percent and 20.9 percent in the past two years. We continue to explore a health insurance pool with Scott County and cities of Scott County, which could occur in 2027. To offset the increase the city is proposing to utilize $350,000 of fund balance previously set aside for potentially moving to self insured health insurance, which is identified in the transfers section of the memo. The budget includes the following new items impacting the 2026 budget. - Building Health Inspector ($121k) – Shakopee needs a dedicated health inspector to ensure the safety and cleanliness of our 12 hotels and 72 restaurants, particularly with the opening of the 19,000-seat amphitheater, which will significantly increase tourism and food service demand. A full-time inspector will help maintain public

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health standards, respond promptly to complaints, and support local businesses in meeting state and local regulations—safeguarding both residents and the thousands of visitors expected to attend events throughout the year. The position will be offset by restaurant and hotel licenses and inspection revenues. - MN Paid Leave ($93k) – state mandated leave program that requires a .38% contribution of gross wages from employer and employee. The new leave provides job-protected paid time off for eligible employees (up to 20 weeks per year) to care for themselves or family members due to medical reasons, family needs or safety concerns. The City will be contracting with a private insurance provider for this benefit. - Clerk Administrative Assistant ($54k) – proposed change from part-time administrative position to a full-time position with benefits. Will provide consistent front-desk customer service and support other positions by enabling them to focus on their specialized areas. - Part-time Marketing Specialist ($39k) – this shared position between recreation and communications replaces the seasonal intern with year-round professional marking support for programs, events and facilities at minimal add cost. The City’s holds workers compensation insurance through the League of Minnesota’s Insurance Trust. From 2022 to 2024 we saw rates trend upwards significantly, specifically for public safety employees. In the 2025 budget, the city forecasted those increases to continue, however we have seen our rates decline. Based on our last renewal, claims data and recent changes to post-traumatic stress disorder disability law, we have budgeted for a decrease in workers compensation insurance of $295,000. Operational Expenditure Changes Adjustments to operating budgets that are anticipated to continue into future years are shown below. These include contractual and utility increases. Description Change Public Safety – amphitheater contracted costs (offset by revenue) $300,000 Engineering contracted construction inspections 170,000 Contingency 110,100 Misc. supply and services (net adjustments) 93,100 Utilities (electric/water/gas) 72,500 County prosecution costs 42,700 Fire – turnout gear/uniforms 34,300 Community center cleaning contract 30,300 Fire – supplies, minor equipment 28,800 Building permit credit card fees 25,000 Finance Contracts (assessing/audit/actuary) 24,000 Fire – training 18,100 Park restroom cleaning contract 12,000 Change in operational expenses $961,010

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During the early stages of the budget process significant budget adjustments are identified for 2026, which is typically any line item that would increase by greater than $10,000. For operations we also review software contracts and include a forecast for utilities and fuel from a city-wide perspective to adjust these amounts consistently across the organization. Departments then enter their remaining line items into their operating budgets. Engineer professional services were increased for contracted construction review services related to development. These costs are reimbursed through engineering fees. Contingency (unallocated funds) has been increased by $110,000 for unknowns related to insurance rates, firefighter union negotiations and miscellaneous items that might arise following the adoption of the budget. The Fire Department has requested additional funding to provide for turnout gear, additional medical equipment, uniforms, and additional training. The city contracts with Scott County to provide prosecution services, the cost for 2026 will increase by $42,700. The Community Center includes an increase of $30,300 to allow them to increase their cleaning contract from 2 days per week to 7 days per week, which would allow maintenance staff to focus more on deep cleaning and preventative maintenance. Rent Changes The city utilizes internal services funds to accumulate funds for the purchase or replacement of city equipment and facilities. The funding sources are annual rents (internal charges) to the appropriate departments. Description Change Equipment Rent $175,700 Building Rent 124,800 Park Facilities Rent 40,000 Information Technology Rent 18,700 Change in internal rent charges $359,200 The equipment rent increase is both a result of new equipment being added to the schedule as well as increases in year over year costs of vehicles and equipment. A 20-year equipment replacement schedule is included in the 5-year Capital Improvement Plan that identifies all equipment, useful lives, replacement years and costs. Building rents are set with the intention that they would provide the funding for major maintenance projects (roofs, boilers, hvac, etc.), but not fully fund building replacement or new construction. The rent increase is both the result of projects related to the aging of city buildings and inflationary costs of those projects. The annual cost for the various internal service funds are calculated based on estimated useful life or scheduled replacement dates. The amounts for 2026 have been further adjusted (decreased) based on current balances. As an example, in 2024 fire vehicles were sold and proceeds of the sale were deposited in the equipment fund, which was taken into account with the budget request for 2025 and 2026.

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One-time Adjustments The General Fund up and down swings are typically moderated through the use of internal rent charges. However, a few one-time adjustments have been included in this budget. Comprehensive plan updates that will span 2026 and 2027. These costs will be offset by a one time reduction of salt inventory, built up from the recent mild winters and removal of previous one-time items from the 2025 budget.

Description

Change

Comprehensive Plan

$100,000 (50,000) (75,000) (68,000) ($93,000)

Road Materials/Salt (one-time inventory reduction for 2026)

Fire Admin. vehicle

Building Inspector Ford Lightning

Change in one-time costs

Debt Service The city council approved a transfer of $346,000 of year-end fund balance to pay the 2026 payment on the 2022A Improvement Bonds. The council approved a similar transfer the previous year which effectively eliminated the need for the debt service levy for these bonds. City Council approved a debt service levy reduction to use the available fund balance in both the existing 2016A debt service fund and the 2022A debt service. If approved, this will result in no change to the debt service levy. Capital Project Funds/Capital Improvements Levy Staff and city council have reviewed the 2026-2030 CIP and projects programmed for 2026. The CIP identifies $54.0 million in projects for 2026. The creation and update of a multi-year capital plan allows the city to plan for its current and long-term needs. Project areas within the CIP include buildings, equipment replacement, information technology, parks, street, sanitary sewer and storm drainage. The CIP is published as a separate document and includes appendixes for a 15-year CIP, 20-year equipment replacement schedule and a long-term financial plan. Over the five-year plan annual overlay, rehab and reconstruction projects total $38.7 million, which is an average annual cost of $7.7 million needed to maintain current city roadways. This is a significant increase over the previous five years, looking back at the 2021-2025 CIP, those same annual projects total $20.9 million, which was an average of $4.2 million. Recurring funding sources include tax levy, franchise fees, municipal state aid and special assessments. Recurring funding has not kept pace with increasing street improvement costs. That funding gap has been plugged in recent years through one-time funding sources, including a bond issue in 2022 and year-end General Fund transfers. For 2026, staff is recommending an increase the CIP levy from $1.2 million to $1.5 million to prevent that annual funding gap from further widening.

The city currently does not have a bond sale anticipated in the budget or CIP for 2026, however a bond issue in 2026 or 2027 will need to be considered to bridge the funding gap.

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Economic Development Authority The Shakopee EDA has the statutory authority to levy a small percentage (up to 0.0185%) of the city’s taxable market value, which for 2026 would be a maximum of $1,532,766. The EDA and City Council can set the levy at any amount up to this cap. The EDA levy is identified on property tax statements as a separate local tax outside of the city’s general property tax. For 2026, the preliminary request is for an EDA levy of $550,000 ($50,000 increase). Additional funding is provided through a contribution of ½ percent of revenues from the Shakopee Public Utilities Commission. Staff is proposing a new ongoing transfer beginning in 2026 from the EDA in the amount of $50,000. Similar to the city utility funds (sewer and storm water), the EDA receives administration support from general fund operations including the city council, finance, information technology, communications and human resources. From a financial standpoint, the administration allocation would better reflect the full cost of the EDA. A corresponding $50,000 increase in the EDA levy is being proposed to allow for no net impact on the EDA. The EDA serves as the landlord for the main level business tenants at River City Centre. The EDA currently owns the land and the CDA owns the building. The activity (lease revenue and expenditures) is accounted for in a separate fund of the EDA. Taxable Market Value The city’s taxable market value is at $8.70 billion, which is an increase of $412 million (5.0%) from last year. Residential, apartment, commercial all saw growth in market value. New construction accounted for 57.8% of the increase in taxable market value. Class Payable 2025 Payable 2026 Change (%) Agricultural $41,712,610 $53,862,863 29.1% Apartment 775,299,400 849,623,207 9.6% Commercial 745,589,700 771,505,500 3.5% Industrial 1,765,009,000 1,821,276,800 3.2% Public Utility/Railroad 36,422,700 36,480,300 0.2% Residential 4,917,336,577 5,160,489,043 4.9% Other 3,849,500 3,849,600 0.0% Totals $8,285,219,487 $8,697,087,313 5.0%

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For the city of Shakopee, the total residential taxable market value increased 4.9 percent (includes new construction), the majority of homes (93%) are seeing very little change in their values (increase/decrease by less than the 5.0 percent). A breakdown of the value changes is provided below.

Number of Residential Properties Residential Impacts - Shakopee

Increase/Decrease Estimated Market Value Value Range

Percentage of

Total

+15.01+%

187

1%

+10.01-15.00% 70

1%

+5.01-10.00% 693

5%

+0.01-5.00% 7,773

59%

No Change

503

4%

-0.01-5.00% 3,900

30%

-5.01 - 10.00% 12

0%

-10.00 - 15.00% 3

0%

-15.01% +

2 0% 13,143 100%

Net Tax Capacity

Class

Payable 2025

Payable 2026

Change (%)

Agricultural Apartment Commercial

$372,853 8,736,702 14,678,599 35,164,710

$476,572 9,668,496 15,196,748 36,290,770

27.8% 10.7%

3.5% 3.2% 0.2% 5.1% 0.0%

Industrial

Public Utility/Railroad

721,249

722,401

Residential

50,000,427

52,533,250

Other

39,220

39,221

Adj. to match county report

-

(146,997)

Gross Tax Capacity

$109,713,760

$114,780,461

4.6%

Adjustments: Tax Increment

($3,842,380) (17,905,859) $87,965,521

($4,395,026) (20,022,701) $90,362,734

14.4% 11.8%

Fiscal Disparity Contribution

Net Tax Capacity

2.7%

Fiscal Disparity Distribution

($8,458,436)

($8,316,317)

1.7 %

The total net tax capacity of the city is estimated at $90,362,734 compared to $87,965,521 in 2025, which is an increase of $2,397,213 (2.7%).

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The gross tax capacity is adjusted for the increase in tax capacity of properties within tax increment financing districts. The tax increment adjustment of $4.4 million represents 3.8 percent of gross tax capacity. The net increase is primarily related to the growth of Canterbury Commons. It is important to note that these developments would not have occurred without the use of tax increment financing. The value and tax capacity of these districts are added to the city’s tax roll upon the decertification of these districts. The gross tax capacity is also adjusted for the fiscal disparities program which is unique to the seven-county metro area and is further explained in the diagram below:

The city’s estimated contribution to the program is $20.0 million in tax capacity, and the distribution is estimated at $8.3 million for a net contributed amount of $11.7 million. This is an increase of $2.2 million. The city of Shakopee continues to be one of the top net contributors (4 th highest) to the program in 2026 at $11.7 million (10.2%) of the city’s tax capacity.

City Tax Rates The tax levy and market value estimates are expected to have a minimal impact on the city’s tax rate, slightly increasing from 27.77 percent to an estimated 28.67 percent.

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Median Value Home The value of the median value home has increased from $350,700 to $361,300 over the past year. This is an increase of $10,600 (3.0%). The following chart provides information on the median value home and city property taxes paid since 2021. The orange bar and amounts on the left axis represent the median value home.

Based on the proposed property tax levy and current assessment date, for the median value home this equates to an increase of $63 or (6.8 percent) annually in property taxes. Absent any change in value, homeowners can expect a tax increase of $30 or about 3.2 percent (taking into consideration the proposed tax rate). Enterprise Funds The city operates two public utility funds Sewer and Surface Water. These funds operate on their own ability to generate revenues and receive no property tax support. The Sewer fund provides for the collection and conveyance of wastewater through a system of mains and lift stations. Sewage is treated by the Metropolitan Council Environmental Services, whose contracted services account for approximately 80 percent of the fund’s operating expenditures. The disposal charge for 2026 will increase to $3,226,182 (1.8%), following a significant 20.6% increase that occurred in 2025. The Surface Water fund maintains the surface water system for the city, which includes 140 miles of storm sewer and 224 ponds. The City’s sewer billings include a city usage rate, a city fixed rate, and Metropolitan Council disposal rate. The surface water charge is based on acreage with residential paying a monthly charge equivalent to 1/3 of an acre. Staff will be proposing rate increases, in the range of one to three percent) for each fund to keep pace with operational costs and maintain the current

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balances of those funds. For a typical residential user, this would amount to approximately $11 annually for sewer charges and $1 annually in surface water charges. Shakopee is below comparable and surrounding cities when it comes to a cost comparison of city property taxes, sanitary sewer and storm water charges. The following chart provides the 2026 annual cost of services for a $350,000 value home (slightly below the median value home in Shakopee) and 5,000 gallons of water usage a month. With the proposed 2026 changes Shakopee remains at the bottom of the comparison.

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Schedule for budget and property tax levy development

Date

Who

What

May 6, 2025

Council/Staff

Review Long-term Financial Plan

June 17, 2025 August 5, 2025

Staff/Public Council/Staff

Public Input Meeting

Review Preliminary Capital Improvement Plan (CIP) 2026 Budget Overview Adopt proposed maximum tax levy for City and EDA tax levy. Certify maximum tax levy to the County which will be used for proposed property tax notices Adopt final 2026-2030 CIP Proposed tax notices sent to owners Hold public meeting to discuss levy and budget. Adopt final tax levy and budget Certify final tax levy and budget to County and State EDA Budget Review

August 19, 2025

Council/Staff

September 16, 2025

Council

September 30, 2025

Staff

October 21, 2025 November 5, 2025 November 12, 2025

Council/Staff

Council County

December 2, 2025

Council

December 16, 2025

Council

December 31, 2025

Staff

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Executive Summary

The City’s annual budget is $111.0 million and consists of a variety of revenue sources, including taxes, licenses and permit fees, utility charges for enterprise funds, and grants from federal and state government agencies.

Shakopee Consolidated Budget $111.0M

Governmental Funds $91.9M

Proprietary Funds $19.1M

General Fund $43.0M

Special Revenue Funds $2.1M

Debt Service Funds $3.8M

Capital Project Funds $43.0M

Enterprise Funds $8.8M

Internal Service Funds $10.3M

Shakopee Government Television $17k

2016A Go Tax Abatement Bond $2.1M 2019A Go Tax Increment Rev Bond $340k 2020A Go Tax Increment Rev Bond $629k 2022A Go Tax Increment Rev Bond $253k 2022A Go Improvement Bond $494k

Park Development $25.7M Capital Improvement Fund $17.2M Tree Replacement $50k

Sewer Fund $5.4M

Equipment I.S. Fund $4.0M

Lodging Tax $460k

Surface Water Fund $3.4M

Park Asset I.S. Fund $1.2M

Economic Development Authority $782k

Info Tech I.S. Fund $828k

Refuse Fund $0

River City Centre $654k

Building I.S. Fund $3.1M

Opioid Settlement $88k

Self Insurance I.S. Fund $1.2M

Public Safety Funding $80k

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Executive Summary

Shakopee Sustainable Cycle of City Government

The model illustrated on the next page sets high-quality City Services as the foundation of a healthy and growing community as shows where external forces and government action might intervene. The high quality services drive population growth, as more people and businesses want to be a part of our community. Population growth drives growth in real estate values, whether that be new development or rising demand for existing inventory. That growth in real estate values ensures rising tax revenue, which pays for the inflation-based cost increases of high-quality city services with minimal impact on the property tax rate . This cycle is the foundation of annual budget development and helps identify and explain influencing factors.

.

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Executive Summary The City’s governmental funds tend to be an area of high visibility as it includes the City’s property tax levy. The total tax levy (including the EDA) for the 2026 budget is $28,764,480, which is a 5.58% increase over 2025. For a median-valued home of $361,300, this would be an estimated increase of $6 3 or 6. 8 %. The levy includes a $24,525,480 operating levy, $2,189,000 debt service levy, capital improvement levy of $1,500,000 and $550,000 Economic Development Authority levy.

19

Executive Summary

The City receives 27.7% of property taxes paid by residents. The remainder is distributed to the Shakopee School District, Scott County and other taxing districts. These amounts will change with the new voter approved school district referendum that passed November 4, 2025.

Where do My Property Taxes Go?

Shakopee School District 39.8%

Other Taxing Districts 5.0%

Shakopee 27.7%

Scott County 27.6%

20

Executive Summary

Recreation – coordination and scheduling of park and athletic field use; coordinating preschool, youth, teen, adult, and senior programs, and special event activities; managing the operations of the Community Center, Ice Arena, SandVenture Outdoor Aquatic Park, and Log Cabin. Public Works – Responsibility for the City’s public roadways including maintenance and snow plowing. Maintenance of vehicles and equipment is part of this department. Park maintenance and updates on all city parks. Planning infrastructure and maintenance of infrastructure by engineering. General Government – Mayor and council, administration including communication, human resources and information technology, clerk’s department handling records, elections, finance, planning and development and maintaining all

government facility buildings.

Public Safety – Police and fire services and building inspections.

Capital Projects – Street infrastructure projects.

Debt Service – principal and interest payments for debt funded through the tax levy (e.g. road projects and ice arena/community center remodel)

General Fund Revenues – the City’s General Fund (operating fund) is the largest fund of the city with different revenue sources as described below. It is estimated that the City will collect $42M in General Fund revenue in 2026.

Licenses and Permits – building permits, liquor, tobacco, food establishments licenses.

Intergovernmental – grants, programs, and aid from the state and federal governments for roads, public safety, and projects. Charges for Services –recreation programs, room and park shelter rentals, engineering fees and contracted services for police.

Miscellaneous – interest income

21

Organization Highlights Shakopee is organized in Minnesota under Plan A, which includes a city administrator, but the city council retains most decision-making authority such as policy setting, adopting ordinances and budget and staffing. The city council has four members who serve staggered terms of four years plus the mayor who serves a four-year term. All council positions are non-partisan, part-time and members are elected at large.

HR Division

IT Division

Department of Administrations (Asst. City Admin.)

City Clerk

Planning Commission/Board of Adjustments & Appeals

Communications Department

Facility Management Division

Police Civil Service Commission

Grant & Special Project Coordinator

Finance Department

Residents

City Council

Shakopee Public Utility Commission (SPU)

Park & Recreation Department

Planning Division

Department of Planning & Development

Building Inspection Division

City Administrator

Economic Development

Police Department

Street Maintenance Department

Fire Department

Engineering Department

Parks Maintenance Division

Public Works Department

Fleet Division

Sanitary Sewer Division

Storm Water Division

22

Organization Highlights FULL-TIME EMPLOYEES

The city counts full-time equivalent (FTE) employees because it shows both full-time and part-time employees based on the numbers of hours worked per week. The city budgeted for an increase of City FTEs from 179 in 2025 to 181.5 in 2026. This increase reflects the addition of a building inspector, recreation specialist and a part-time to full time administrative assistant. In 2024 the city changed from a paid on call firefighters to part-time fire fighters to meet the community demands and manage the department more effectively.

Department/Fund

2022 2023 2024 2025 2026 Number of Full-Time Equivalent Employees

Administration

14 3.5

14 3.5

15 3.5

15 3.5

15

City Clerk

4 4

Finance

4

4

4

4

Planning & Development

4.4

4.4

4.4

4.4

4.4

Facilities

2 0

2

2

2

2

Police

Sworn Officers

50

50

52

52

52

Civilian Employees

12.5

12.5

12.5

12.5

12.5

Fire

8

11 9.1 10

14 9.1 10

15

15

Building Inspection

8.1 9.5 9.5

10.1

11.1

Engineering

9 9 3

9 9 3

Street Fleet

9 3

9 3

3

Park Maintenance

11.2

12.2

12.2

12.2

12.2

Recreation

18 1.5 3.5 3.3

18 1.5 3.5 3.3

19 1.5 3.5 3.3

19 1.5 3.5 3.3

20 1.5 3.5 3.3

Economic Development Authority

Sewer Fund

Storm Drainage Fund

Total Employees

166.00 171.00 178.00 179.00 181.50

23

Community Profile The City of Shakopee was incorporated initially in 1857 and for the second time in 1870 and is located about 25 miles southwest of Minneapolis. Bounded by the Minnesota River on the north, Shakopee is in the northern part of Scott County and is the county seat. The city is one of the most rapidly growing communities of the state. The 2020 population of the city was 43,698 as of the 2020 census and the land area covered is approximately 29.5 square miles. State statute allows the City to extend its corporate limits by annexation, which occurs periodically. The city provides the normal municipal services such as police and fire protection, street and infrastructure construction and maintenance, parks and recreation, planning and zoning. Also provided are sewer and storm drainage utilities, and organized refuse collection and recycling. Electric and water utilities are operated by Shakopee Public Utilities Commission which is appointed by the City Council. Housing, economic development and redevelopment are controlled by the Shakopee Economic Development Authority. The Authority is comprised of city council members and is included as an integral part of the city’s budget.

24

Community Profile

Market Value of Property: Last 10 Fiscal Years Shakopee is a growing city with substantial growth the past few years. Since 2017, spurred by growth the city has seen a taxable market value increase by about $4.6 billion (115.6%).

Market Value (In millions)

Fiscal Year

Estimated

Taxable $ 4,034 $ 4,343 $ 4,614 $ 5,064 $ 5,540 $ 6,045 $ 7,216 $ 7,782 $ 8,285 $ 8,697

2017 $ 4,251 2018 $ 4,558 2019 $ 4,824 2020 $ 5,279 2021 $ 5,750 2022 $ 6,214 2023 $ 7,369 2024 $ 7,952 2025 $ 8,532 2026 $ 8,914

Source: Property in the City is assessed annually. The assessed value is equal to market value, although taxable value may be different, as shown. Information is provided to the city from the Scott County Assessor's Office.

25

Community Profile The City of Shakopee has a diverse tax base and employment opportunities are also diverse. There are several larger taxpayers and employers in the city that are important, but none are dominant. Shakopee is not overly reliant on one business or industry which has allowed us to weather fluctuations in the economy.

Top 10 Taxpayers

2023/24 Tax Capacity Value Rank

% of Total Tax Capacity Value

Taxpayer

MCP Shakopee LLC GEP X Addison LLC

$

1,223,406

1 2 3 4 5 6 7 8 9

1.32% 0.93% 0.81% 0.67% 0.66% 0.64% 0.62% 0.62% 0.56% 0.52% 7.35%

863,721 753,833 619,949 609,817 589,714 577,450

Rahr Malting Shakkin LLC

J & J Minneapolis LLC Seagate Technology LLC

Southwest Logistic Center, LLC

Lothenbach Properties & Challenge Printing 570,651

Xcel Energy

514,444 484,760

EXETER 2101 4th LLC

10

$

6,807,745

Source: Scott County

Top 10 Employers

Total City Employment

Employers

Employees Rank

Amazon

2,200 1 1,706 2 1,528 3 1,224 4 1,160 5 1000 6 905 7 823 8 775 9

5.06% 3.92% 3.51% 2.81% 2.67% 2.30% 2.08% 1.89% 1.78% 1.61% 27.64%

Valley Fair Emerson

School District No. 720 Cyberpower Systems

Datacard

St. Francis RMC Scott County

Imagine Print Solutions

Canterbury Park

700

10

12,021

Source: D&B Hoovers, https://app.dnbhoovers.com/, and a December 2024 best efforts contact of individual employers. This is not a comprehensive list. Some employers do not respond to inquiries.

26

2026 Annual Budget

GOVERNMENT WIDE FUNDS

SPECIAL REVENUE FUNDS

DEBT SERVICE FUNDS

CAPITAL PROJECTS FUNDS

GENERAL FUND

TOTAL

REVENUES: TAXES

$24,581,880 $1,036,000 $2,189,000 $2,450,000 $30,256,880

SPECIAL ASSESSMENTS LICENSES AND PERMITS INTERGOVERNMENTAL CHARGES FOR SERVICES FINES AND FORFEITURES

17,000

0

111,700

550,300

679,000

4,392,000 5,617,250 6,548,180

20,000 335,000 24,000 68,000 402,500

0

750,000 5,162,000

0 22,234,800 28,187,050

0 0 0

0 6,572,180

325,200 625,700

0

393,200

MISCELLANEOUS

617,000 1,645,200

TOTAL REVENUES

42,107,210 1,885,500 2,300,700 26,602,100 72,895,510

EXPENDITURES: GENERAL GOVERNMENT

(6,577,150) (21,424,230) (8,771,130) (5,997,100)

(477,400) (167,220)

0 0

0 (7,054,550) 0 (21,591,450)

PUBLIC SAFETY PUBLIC WORKS

0 0

0 (43,006,500) (51,777,630)

PARK AND RECREATION ECONOMIC DEVELOPMENT

0 0 0

0 (5,997,100) 0 (1,435,700) 0 (237,600) 0 (3,810,200)

0 (1,435,700)

UNALLOCATED DEBT SERVICE

(237,600)

0

0

0 (3,810,200)

TOTAL EXPENDITURES (43,007,210)

(2,080,320) (3,810,200) (43,006,500) (91,904,230)

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES

(900,000)

(194,820) (1,509,500) (16,404,400) (19,008,720)

OTHER FINANCING: TRANSFERS IN TRANSFERS OUT

900,000

0 1,297,800 4,282,300 6,480,100

0 (150,000)

0

(33,000)

(183,000)

TOTAL OTHER FINANCING

900,000 (150,000)

1,297,800 4,249,300 6,297,100

EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES PROPERTY TAX LEVY REQUIRED TO SUPPORT THIS BUDGET

$0 ($344,820) ($211,700) ($12,155,100) ($12,711,620)

$24,525,480 $550,000 $2,189,000 $1,500,000 $28,764,480

27

2026 Annual Budget

PROPRIETARY FUNDS

INTERNAL SERVICE

SURFACE WATER FUND

ENTERPRISE FUND TOTAL

SEWER FUND

REFUSE FUND

TOTAL

FUNDS TOTAL

REVENUES: OPERATING REVENUES EXPENSES: OPERATING EXPENSES

5,155,000 1,431,000

90,000 6,676,000 4,816,200 11,492,200

(4,419,950) (2,204,150) (1,010,000) (1,180,000)

0 (6,624,100) (9,180,800) (15,804,900)

DEPRECIATION

0 (2,190,000)

0 (2,190,000)

OPERATING INCOME (LOSS)

(274,950) (1,953,150)

90,000 (2,138,100) (4,364,600) (6,502,700)

NON-OPERATING INCOME

123,000 230,000

0 0

353,000 1,540,000 1,893,000

NON-OPERATING EXPENSES

0

0

0

0

0

NET INCOME (LOSS) BEFORE TRANSFERS

(151,950) (1,723,150)

90,000 (1,785,100) (2,824,600) (4,609,700)

CAPITAL CONTRIBUTION

50,000 200,000

0 0

250,000

0 250,000

TRANSFERS IN TRANSFERS OUT NET INCOME (LOSS)

0

0

0 150,000 150,000

(2,050,000) (2,449,300)

0 (4,499,300)

(300,000) (4,799,300)

2,151,950 3,972,450 (90,000)

6,034,400 2,974,600 9,009,000