St. Paul's City Council is asking for budget increases of $120,000 a year for the next three years to pay back a loan the council took out to cover cost overruns on its own office renovation project, which has come in $360,000 over budget. The request lands at a particularly awkward moment: the city is bracing for a projected $26 million budget gap heading into 2027.
The renovation, which addresses the council's offices and meeting rooms, was pegged at $2 million, according to the Minnesota Star Tribune. A separate account reported the project's budget had grown from roughly $1.95 million to $2.31 million, according to a report republished by Yahoo News. The two figures aren't directly reconciled in available reporting, but both accounts agree the project landed $360,000 above its budget.
A Year-Long Delay Tied To A Mayoral Veto
Part of the overrun traces back to former Mayor Melvin Carter, whose veto delayed work on the renovation by a full year, driving costs higher in the interim, the Star Tribune's reporting shows. Carter had described the remodel dismissively as new carpets and drapes when he vetoed the funding, the newspaper reported. Council members and staff have pushed back on that characterization, saying the upgrades were about security and disability access rather than cosmetic touches.
The veto fight isn't new. During the dispute over St. Paul's 2025 budget, Carter cut $1.8 million intended for the council office renovations, calling the project unnecessary, while then-Council President Mitra Jalali countered that the work was meant to improve accessibility for people with disabilities, according to a report from MinnPost. Construction on the project eventually began in July, per the Yahoo-republished account, and an interfund loan agreement to keep it funded was approved in August.
Cost-Cutting And A City Loan
To rein in expenses, the project cut some of its pricier finishes and scaled back new furniture purchases, instead reusing existing pieces that council staff have described as historic, the Star Tribune reported. Even with those trims, the council needed a $360,000 loan from the city in August to keep construction going. Council budget officer Jay Willms said the loan was necessary to keep the project moving until the new budget year arrives.
The proposed $120,000 annual budget increases heard by the council on Wednesday would be used to repay that loan over three years, according to the same report. The council is also aiming to avoid further inflation-related cost increases by keeping the project on track. In the meantime, the council has been renting temporary office space from the city while the renovation continues; the council is expected to return to its City Hall offices in January, per the Yahoo-republished account, though no year was specified for that return date.
Budget Pressures Could Mean Fewer City Jobs
About 94 percent of the council's budget already goes toward salaries for staff and council members, the Star Tribune reported, meaning that absorbing renovation repayment costs within that budget could require keeping positions vacant or cutting staff. That tension comes as St. Paul grapples with a $26 million budget gap for 2027, a shortfall the mayor's office earlier this year called the largest the city had faced at the start of a budget season, according to a report from the Pioneer Press. That outlet noted the 2027 gap equals about 6 percent of the city's 2026 general fund budget, compared with a $23 million gap, or 5.6 percent, the prior year.
Mayor Kaohly Her has proposed an $887.8 million budget for next year, and the council has already set a maximum levy that would raise property taxes by 6.8 percent. The council is set to present amendments to Her's proposal this month as it looks for ways to close the gap, with a final budget typically passed in mid-December and expected to be approved next month.
