St. Cloud’s Building Boom Cools Sharply as City Debt Climbs to $189.8 Million

(KNSI) – The City of St. Cloud’s growth engine slowed to a crawl in 2025, with the value of all taxable property in the city rising just 1.41%, a steep drop from the 9.82% jump the year before and the 15.67% surge in 2023.

That’s according to a newly released Annual Comprehensive Financial Report. The 258-page document otherwise carries a clean audit opinion and paints a picture of a financially healthy city. But the near-flattening of the tax base matters to every property owner in St. Cloud, because it shapes how much room the city has to raise money without pushing tax rates higher.

City finance staff attribute the slowdown to property values “remaining relatively flat” in 2025. The estimated market value of all property in St. Cloud reached $6.09 billion, up only modestly from $6.02 billion a year earlier. For comparison, the tax base grew more than 15% in 2023 and nearly 10% in 2024.

Why this matters

St. Cloud has a financial policy that targets keeping any property tax levy increase in line with the change in its tax base. In effect, it ties how much the city lets its total tax collection grow each year to how fast taxable property values are rising, a built-in brake on tax increases. A fast-growing base, fueled partly by new construction, gives the city room to raise more revenue while staying inside that target. When growth slows to 1.41%, that room narrows. If the cost of running the city keeps climbing, the council faces a tighter choice between holding the line on spending and letting the levy rise faster than its own policy target.

That pressure has already come to a head. In December, the City Council unanimously approved a $100.8 million budget for 2026 that carries a 4.49% property tax increase, the city’s first in two decades. Mayor Jake Anderson said the longstanding approach of limiting spending growth to match rising property values had opened a $3.2 million deficit. The report is in many ways the paper trail behind that decision.

City staff are forecasting the tax base will rebound somewhat in 2026, projecting growth of 3.63%.

Building permits tell the same story

The cooling shows up in construction activity, too. St. Cloud issued 1,550 building permits in 2025, down from 1,752 in 2024, and far below the 3,104 issued in 2023 and 3,469 in 2022. The total dollar value of those permits actually rose to $218.1 million, lifted by a handful of large projects, including a $41 million addition to the CentraCare Plaza building and a $30 million rehabilitation center at the CentraCare campus.

Debt hits a new high

Even as growth slowed, the city took on more debt. St. Cloud’s total outstanding debt climbed $6.2 million to $189.8 million, an increase of about 3.3%. During 2025, the city issued $16.3 million in General Obligation Bonds to finance street reconstruction and capital equipment, drew an additional $11.2 million in state infrastructure loans, and paid down $21.4 million in existing debt.

The borrowing has not dented the city’s standing with credit raters. Standard and Poor’s affirmed St. Cloud’s AA+ rating on its 2025 bond issues, citing the city’s role as a regional economic center, its diverse employment base and what the agency called solid financial operations and a moderate debt burden.

The rest of the ledger looks strong

By most measures, it appears St. Cloud’s books are in good shape. The city’s overall net position grew by $36.9 million during the year, and its combined governmental fund balances rose nearly $7.9 million to $78.2 million. The general fund’s unassigned reserve stood at $28.1 million, about 42.5% of annual general fund spending, comfortably inside the city’s policy range of 35% to 50%.

Independent auditor BerganKDV issued an unmodified, or “clean,” opinion on the financial statements, the strongest result a government can receive. The report also marks the 44th consecutive year St. Cloud has earned the Government Finance Officers Association’s Certificate of Achievement for Excellence in Financial Reporting.

Public safety is the biggest cost in city government

The single largest driver of city spending is public safety, which reached $50 million in 2025, up nearly $4 million from the prior year and roughly 57% of all governmental expenses. The biggest factor was the Fire Department, which added 10 positions during the year. The city also bought a new ladder truck, pumper truck and fire engine for the department.

The Fire Department’s budget had to be amended upward by $264,500 during the year to cover retiree payouts and overtime costs that were not built into the original budget. Citywide, personnel costs were driven up by those new firefighters, contractual cost-of-living adjustments, step raises and climbing insurance costs.

Downtown parking is in the red

The city’s downtown parking system lost money in 2025. The fund posted an operating loss and saw its net position fall $482,223, with the report pointing to declining revenues as the cause. It took in about $1.25 million in charges for services against $1.91 million in expenses.

The shortfall is a small slice of a city budget measured in the hundreds of millions, but it’s a number worth watching, because parking revenue is one of the more direct financial signals of how much activity downtown is actually generating.

A Self-Insurance fund sliding deeper into deficit

One of the more unusual items in the report is the city’s Self-Insurance fund, which finished 2025 with a deficit of $2,028,855, and the hole is getting bigger. The fund started the year already $1,230,630 in the red, meaning its deficit grew by $798,225 in a single year.

The city runs its own self-funded health insurance program through HealthPartners, paying employee and retiree medical claims directly out of this fund rather than buying full coverage from an outside insurer. The report attributes the worsening balance to the rising cost of insurance and large claims submitted during the year. City staff say the deficit will be erased over the next several years by adjusting premiums and charging individual departments for their overages, but for now, claims are outrunning what the fund collects.

Read the full 2025 Annual Comprehensive Financial Report by clicking here.

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