St. Cloud City Finances Score High Marks, But a Closer Look Flags a Few Things to Watch

(KNSI) — St. Cloud’s finances grew stronger in 2025 by nearly every headline measure, but a second report the city produces each year, one meant specifically to flag trouble before it grows, shows several city-run enterprises still losing money, and warns that rising health insurance costs could squeeze the budget as soon as next year.

A Strong Year on Paper

According to the Popular Annual Financial Report, the city’s net position, or essentially its net worth, factoring in assets, liabilities, and deferred amounts, rose to $561.3 million in 2025, a 7% increase driven largely by continued investment in infrastructure and a healthy General Fund. Standard & Poor’s affirmed the city’s AA+ bond rating on its 2025 bond issue, the second-highest rating available and one that keeps St. Cloud’s future borrowing costs low. The city also swept the Government Finance Officers Association’s “Triple Crown”. Those are the top awards for financial reporting, popular annual reporting, and budget presentation for the fiscal year ended December 31st, 2024. General Fund revenue totaled $67.79 million, up 3.2% from the prior year, with 68% of that spending going toward police, fire, and other public safety functions.

A Second Report Tells a Different Story

The city Finance Department’s Annual Financial Trend Report shows a less celebratory picture. The report is a state-mandated diagnostic built on criteria from the International City Management Association. Rather than showcase the city’s finances, it’s designed to do the opposite. It looks at 29 specific indicators of financial stress before they become serious problems. In a cover letter to Mayor Jake Anderson and the City Council dated August 3rd, Finance Director DeAnna Fah explains that analyzing the report, “You will find that although the overall financial health of the City remains strong, we do have several Enterprise Funds showing warning trends,” Fah wrote, tracing the pattern back to the lingering financial impact of the COVID-19 pandemic, which first showed up in the city’s 2021 trend data.

Enterprise Funds Under Pressure

The Enterprise Funds are items such as parking, recreation, and event venues that are supposed to cover their own costs through user fees rather than tax dollars.

The Parking System has posted real operating losses in three of the last four years, including a $574,034 loss in 2025. Its cash reserves have fallen by $741,682 since 2021, and even when depreciation is removed, the fund’s net income hasn’t been enough to fully cover its debt service payments. That’s the final bond payment that comes due in 2027. River’s Edge Convention Center lost $1.1 million in 2025 and has posted losses in three of the last five years, driven partly by a decline in room rentals and related commissions. The Stormwater Utility remains profitable but saw net income drop substantially compared to 2024. The city notes that state and federal grant funding for stormwater projects is drying up, meaning future capital costs will fall increasingly on cash reserves rather than outside money.

Warning Signs in the Core Budget

Beyond the enterprise funds, the trend report flags several less dramatic but still notable items in the city’s core budget.

The General Fund’s operating surplus has been thin and volatile, going from an 11.3% surplus in 2021 to a 6.9% deficit in 2022, and only partially recovering to a 2.5% surplus in 2025. The fund balance that serves as the city’s rainy-day cushion is also being eaten up. It has gone from 60.5% of operating expenditures in 2021 down to 43.4% in 2025. That’s still within the city’s own target of 35% to 50%, but the multi-year downward trend was flagged as a warning sign.

Personnel costs are climbing too, as fringe benefits now equal 50.8% of salaries and wages, up from 48.2% in 2021, and the city has already absorbed a 10% health insurance rate increase this year, with another 15% hike projected for next year. That’s a cost that will land squarely in upcoming budget cycles. Meanwhile, the property tax levy grew just 1.19% in 2025, even as the underlying tax base grew 3.63% for taxes payable in 2026. The gap raises the question of whether the city closes it with a larger levy increase next year.

Not All Bad News

Not all the underlying trends are cause for concern.

Building permit valuations jumped to $218.1 million in 2025, up from $142.8 million the year before, reflecting a wave of development that includes a $41 million addition to the CentraCare Plaza building, a new 95-unit apartment complex, a low-barrier shelter being built by Avivo, and a new warehouse for Sunburst Memorials. The city also continued heavy capital investment in 2025, including a $40.8 million upgrade to its water treatment facility and the purchase of new fire apparatus, including an aerial ladder truck and pumper trucks to replace engines more than 20 years old. And despite population growth, St. Cloud remains leaner in staffing than comparable Minnesota cities, employing 6.8 full-time workers per 1,000 residents compared with 8.7 to 9.1 in St. Paul, Rochester, Duluth, and Moorhead.

What It Means for 2027

The reports were released just as Mayor Jake Anderson also outlined his preliminary budget for 2027, which includes a potential $146 bump in property tax bills for median-valued homes.

General fund revenue for 2027 is budgeted at $81.7 million. Taxes account for about two-thirds of that. Departments submitted about $10 million in requests. Anderson’s proposal funds about $692,000 of it, turning down new vehicles, first responder drones, tree-trimming equipment and 15 of the 17 full-time positions departments asked for.

It would be Anderson’s second consecutive budget with an increase. The council unanimously approved a 4.49% increase for 2026, the city’s first in two decades.

When You Can Weigh In

A public hearing on the budget is set for August 31st, and the council must certify a preliminary maximum levy by September 30th. The truth in taxation hearing and final levy vote are set for early December. The preliminary maximum is a ceiling, so December’s number can come in lower, but not higher.

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