This story was originally published by Iron Range Today.
BIWABIK — A nearly 30% tax levy will get one final look, said Biwabik city officials Monday, Dec. 8, before a decision is made next week.
Tax rates are up across the board on the Iron Range and neighboring counties, but present-day factors and past deferrals came to a head in the city this year. The results is one of the region’s highest proposed tax increases, by percentage, in 2026.
All that’s combined with turnover at the council and leadership levels, said city administrator Michael Schultz, who has been on the job for five weeks after serving in Tower.
“It’s a large and complex budget,” he said. “I’ve been thrown into it the last few weeks, but have been doing my best either reduce expenses where we could or increase revenue where we could.”
Of the $384,078 budget gap Biwabik needs to fill in 2026, $45,000 (11.7%) is due to over payment of the state mineral tax by the Minnesota Department of Natural Resources.
Other immediate factors include a $100,000 levy boost in 2025 that won’t carry over, a new fire truck, increases in personnel costs and a new policing contract with the city of Gilbert.
All told, those issues account for $355,000 of the total 29.6% levy increase, which is down from the initial proposal of 40.4%.
Councilor Dan Berg said he wanted the budget committee to give it another look before finalizing the increase. The council opted to vote on the levy at 5 p.m., Wednesday, Dec. 17.
“There’s some things I’ve seen that you wouldn’t know about,” he told Schultz, referencing potential one-off items carried into the 2026 budget.
‘The negative budget days’
Biwabik Mayor Steve Biondich said the city is still recovering from decades of deferrals on projects, and trying to take a proactive approach as new expenses arise.
A new fire truck is among those items next year, at the cost of a $135,000 loan payment.
Biondich said the last time Biwabik needed a fire truck, it couldn’t afford a new one and bought a used rig. Now, the old truck “is costing us a fortune” and the city still has to raise taxes to afford a new one.
Resident Greg Schultz questioned the council about sharing the costs of equipment with nearby cities. Biondich said meetings with the East Range Joint Powers Board — which includes Biwabik, Aurora, Hoyt Lakes and the Town of White — have started around the issue.
“We’ve had preliminary discussions on that very thing,” he said. “I don’t know what’s going to happen, but that first meeting has taken place.”
HVAC upgrades for city hall and the pavilion have been issues for “five to 10 years,” Biondich added, with numerous payments to third-party vendors for repairs.
The city received a $383,000 grant from the Department of Iron Range Resources and Rehabilitation last week for a new HVAC system next year. Citing the city’s financial hardships, the agency waived the one-to-one fund match requirement for Biwabik, which will cover $31,900 of the total $415,400.
“The proverbial kicking the can down the road, those were the negative budget days,” he said. “We’re trying to get ahead and stop some of this hemorrhaging that continues and continues.”
A $2.7M mistake
State DNR officials in August noticed the balances in various mineral funds were lower than they should be, prompting an audit dating back to 2016.
The second look revealed $2.7 million sent to Iron Range counties, municipalities and school districts between 2022 and 2024 that should have gone to a statewide education fund.
Biwabik was among the handful of entities needing to repay the state for the mistakenly distributed funds. The city of Nashwauk ($205,076) and the school districts of Nashwauk-Keewatin ($383,508), Greenway ($168,704) and Rock Ridge ($180,997) were also among those needing to make payment.
Biondich said in a follow up email with Iron Range Today that St. Louis County repaid the DNR, and the city will pay $45,000 to the county over the next three years.
“It’s a hard pill to swallow, but it is what it is,” he added.
New police contract
The city finalized negotiations on a new police contract with the city of Gilbert — a 21-hour daily coverage contract that increased for the first time since 2017 — with a $451,140 payment due to Gilbert in 2026.
Talks were drawn out between the councils, with Biondich and Jim Weikum, who was serving as interim city administrator at the time. The mayor said Gilbert offered proposals that included steep increases in the contract and for Biwabik to store evidence from crimes committed within its coverage area.
“It just wasn’t acceptable,” Biondich said. “There was a lot of back and forth. We were not willing to pay that, but were willing to accept other proposals.”
He also expects the city will open talks with Dyno Nobel, an explosives distributor located outside Biwabik proper, about the company’s policing fees.
Dyno Nobel currently pays Biwabik $12,000 annually for daily police department rounds at its facility. Considering the contract increase from Gilbert, a similar percentage bump with the company would raise that payment to around $21,000 annually.
Complicated tax base
Residents on Voyageurs Trail, a line of higher-end homes near Giants Ridge, expressed concern about the distribution of tax increases by the city.
City estimates, based on the 29.6% levy, show a tax increase of more than $1,600 next year for a home with a market value of $460,000. That’s compared to a $53 increase for a $32,000 home and a $196 increase for a $99,000 home.
“Our increases are bigger than what some of the people are even paying for their property taxes,” said Deb Holmstrom, a resident on Voyageurs Trail. “There has to be some equilibrium. We’re paying the majority.”
Biwabik’s tax base is representative of the Iron Range as a whole when considering income demographics in the area.
Thirty percent of households serviced by the IRRR make $100,000 or more annually, while 26% make less than $35,000 a year, according to Minnesota Compass.
“It’s a slippery slope if we don’t want to try and work together as a community,” said resident Tyler Nessett. “We need to help them get their taxes lower. It’s not justifiable for anybody, and there is an imbalance … but I think we need to remember as a community to be active and not just at the end of the year when the budget comes up.”
