The City of Duluth could eliminate its zoo subsidy, cancel travel, fire its lobbyists and slash outside contracts — and still fall well short of resolving the city’s projected budget deficit.
The numbers point to a harder conclusion: Duluth’s financial problem is rooted primarily in employee compensation and the cost of maintaining its current level of public services, not in one conspicuous pocket of government waste.
The city entered 2026 after closing a projected $7.3 million general-fund gap through overtime controls, staff reductions, additional revenue and one-time money. City officials nevertheless projected another shortfall of about $5.8 million for 2027, warning that expenses were rising considerably faster than revenue.
Duluth’s 2026 general fund totals $113.2 million. Salaries, wages and benefits account for approximately $93.8 million, or nearly 83% of that amount, according to the city’s approved budget.
That leaves relatively little room to balance the budget without affecting employees or services.
General-fund salaries and wages increased by about $3.5 million from the 2025 budget, while benefits rose by another $1.7 million. The combined $5.2 million increase occurred even as the city reduced its authorized workforce by 3.8 full-time-equivalent positions.
Police and fire services alone consume 49% of the general fund. Police spending is budgeted at $30.5 million, while the Fire Department receives $24.8 million. Parks, libraries and city facilities account for another $16.6 million, and public works receives about $12.1 million.
Closing a $5.8 million gap exclusively through compensation reductions would require cutting more than 6% of the city’s salary-and-benefit budget. That could mean layoffs, leaving vacancies unfilled, renegotiating labor costs or reducing services.
Overtime remains one potential target. Duluth budgeted $1.72 million in premium pay for 2026, including about $861,000 for the Fire Department and $490,000 for police. Fire overtime exceeded $1.6 million in 2025, prompting the city to add three firefighters in hopes that additional regular staffing would reduce overtime expenses.
Whether that strategy produces savings will be an important test. Adding employees can reduce overtime, but it also creates continuing salary, health care and pension obligations.
Several smaller accounts are likely to attract scrutiny. The general fund includes $150,000 for lobbyists, $234,200 for travel and training, $605,500 for contract services and $279,000 for other professional services.
Eliminating all four categories would save about $1.27 million — less than one-quarter of the projected shortfall. Some of that spending also supports required audits, legal work, technology, employee certification and other services the city cannot simply abandon.
Another $1.68 million is budgeted under the broad heading of “other services and charges.” That account deserves a vendor-by-vendor public review, but its title alone does not establish that the spending is unnecessary.
The Lake Superior Zoo has emerged as another possible target because it receives $510,000 in annual tourism-tax operating support. The Great Lakes Aquarium receives $310,000, Spirit Mountain receives $400,000 and the Greater Downtown Council receives $280,000.
Closing the zoo, however, would not provide an immediate $510,000 general-fund saving. The money comes from Duluth’s tourism-tax fund, which is restricted to tourism-related purposes. The city also owns the zoo property, and relocating more than 300 animals would carry substantial costs. A 2020 estimate placed relocation expenses alone at no less than $500,000.
The tourism budget contains larger expenditures that could face closer examination, including $1.8 million for a tourism marketing firm, $695,000 in discretionary tourism grants and $663,000 for Visit Duluth convention and event sales.
Those programs should be required to demonstrate measurable results, including additional hotel stays, visitor spending and tourism-tax revenue. Reducing them could preserve tourism-fund reserves or redirect money to other visitor-related priorities, but it would not necessarily balance the general fund.
Other large tourism expenditures are debt obligations rather than optional annual programs. Duluth budgeted nearly $4.48 million for Amsoil Arena debt service, $2.05 million for St. Louis River Corridor projects and $900,000 for Spirit Mountain-related debt. Those bills generally cannot be erased without refinancing, selling assets or defaulting on obligations.
The budget therefore offers no painless collection of ceremonial events, consultants and subsidies large enough to resolve Duluth’s structural problem.
A credible deficit plan would likely combine several measures: stricter overtime controls, a hiring freeze or vacancy review, consolidation of administrative functions, competitive bidding for professional services, performance requirements for outside organizations, employee attrition and new discussions about which parks, libraries and public facilities the city can afford to operate.
It could also require additional revenue through taxes, fees or economic growth.
Mayor Roger Reinert acknowledged the scale of the challenge after the 2026 budget was approved, saying the city’s expenses were growing faster than its revenues and warning that maintaining the status quo was not an option.
Duluth can find efficiencies, and its contracts, subsidies and vaguely described accounts deserve greater scrutiny. But the budget’s central fact is difficult to avoid: The city cannot eliminate a multimillion-dollar structural deficit without confronting employee costs, service levels or taxes.
That is where the money is — and where the difficult decisions will be.
