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City of Duluth debt isn’t a policy anymore. It’s a reflex.
You can see it in every line of the city’s 2026 budget — the quiet hum of borrowing beneath the surface. Duluth doesn’t just use debt to build things anymore. It uses debt to exist.
The numbers tell the story, if you know where to look.
Debt service jumps from $14.9 million to $16.8 million next year — a 12 percent increase that the budget narrative treats like background noise. The city’s net direct bonded debt now stands around $34 million, not counting the utility and tourism bonds tucked into separate funds.
That’s not catastrophic. But it’s not casual, either. It’s a pattern — and it’s tightening.
The Borrower’s Mindset
Duluth’s leaders like to say they’re being “strategic” with borrowing.
That word’s doing a lot of work.
When your capital outlay is less than 1 percent of your general fund, and your maintenance backlog stretches back a decade, borrowing isn’t strategy. It’s surrender.
The 2026 budget includes a $20 million Clean Water Surcharge bond — a necessity, they’ll tell you. Sure. But it’s also the largest single-year borrowing since the medical district overhaul. And because it’s tucked inside an enterprise fund, the public will never see it labeled as “city debt.”
Then there’s the $4.57 million tourism-tax bond authorized by the council last fall — again, “dedicated revenue source,” they’ll say. Translation: “not our problem.”
It’s all one city, one credit rating, one taxpayer. And every bond, no matter the fund, adds weight to the same ledger.
Debt by Design
Here’s how the machine works:
- Defer maintenance. Skip the costly repairs now, let the roads, roofs, and pipes age another year.
- Declare the fix a “capital project.” Bundle multiple needs together, wrap them in the language of infrastructure.
- Issue bonds. Borrow big — 10, 20, even 30 years out. Spread the cost thin so the annual payment looks harmless.
- Move the debt service. Shift repayments into special funds or utilities so they don’t appear in the general fund.
- Repeat.
On paper, everything still balances. In reality, Duluth keeps buying time with interest.
The trick works because citizens don’t feel it immediately.
Water rates creep up. Tourism dollars get skimmed. Property taxes inch forward. It’s a slow leak, not a blowout.
The Long Tail of Yesterday’s Projects
Debt is the ghost of budgets past. Every bond Duluth issues today will still be collecting interest long after its champions have moved on.
Look through the ledgers and you’ll see bonds from 2008, 2012, 2017 — still on the books, still being paid down. Many were for projects that sounded essential at the time. Some were. But the habit stuck: fix first, finance forever.
The city now spends roughly $1 of every $7 in the general fund on debt service. That’s money that can’t pave streets, fund libraries, or expand housing programs.
And yet the answer to each new challenge is the same: another bond. Another ribbon cutting. Another quiet promise that “future revenues will cover it.”
Future revenues never do. They just inherit the past.
The Interest Addiction
Debt feels painless at first. That’s what makes it addictive.
Bond payments are predictable. They don’t scream like payroll or pensions. They don’t make headlines. And they give administrators the illusion of progress without the political pain of tax hikes.
But debt is a slow hunger. Each new payment devours flexibility.
When debt service rises — as it will again in 2026 — the city can’t simply stop paying. It has to squeeze elsewhere. That’s why Duluth’s capital outlay keeps shrinking, why department budgets stay frozen, why the “balanced” books hide an imbalance of priorities.
Debt doesn’t just borrow money. It borrows choice.
What Nobody Admits
The unspoken truth is this: Duluth no longer controls its own financial destiny.
The city’s dependence on state aid, combined with its appetite for bonding, has created a structural cage. Even if Duluth wanted to shift to a pay-as-you-go model, it couldn’t without cutting deeply — because the debt payments come first.
The state could reduce aid tomorrow, interest rates could rise another point, and Duluth would have no cushion. The next mayor would inherit a box with no air in it.
That’s the quiet crisis behind the 2026 budget — not corruption, not mismanagement, just a slow, steady surrender to convenience.
The Cultural Problem
Debt isn’t just a number here. It’s part of the civic psyche.
Duluth’s political culture has learned to equate debt with accomplishment.
A bond issue equals a headline. A new project equals progress. Nobody wins reelection for saying, “We paid cash.”
This is how the city ends up celebrating the start of projects, not their payoff. Completion is invisible. Borrowing is public. Paying down debt is administrative drudgery.
That’s how the machine feeds itself — one project, one photo op, one bond at a time.
The Reckoning Ahead
Every machine runs until the friction catches up.
For Duluth, that moment will come when debt service grows faster than revenue — a point that’s closer than the smiling budget graphs suggest.
With annual debt payments already rising $1.8 million this year, and new borrowing scheduled through 2027, the slope is steepening. Add another recession, a dip in tourism, or a legislative cut to LGA, and the gears will grind.
When that happens, Duluth will finally have to answer a question it’s avoided for twenty years: How do you rebuild a city that’s already mortgaged its future to maintain the present?
The Bottom Line
The debt machine keeps spinning because it works — for now. It keeps budgets “balanced,” projects funded, and the headlines upbeat.
But beneath the surface, the math doesn’t lie. Duluth is borrowing against time, and time is starting to charge interest.
The 2026 budget doesn’t show crisis. It shows drift — a city slowly losing the ability to fund itself without reaching for someone else’s wallet.
And until that changes, every “balanced” budget will carry the same fine print: Paid with borrowed money. Payable by someone else.
Howie, 71, is a veteran Duluth print journalist and publisher of HowieHanson.com, which he has operated for 21 years. He is the region’s first and only full-time online daily columnist, covering local news, politics, business, healthcare, education and sports with an independent, community-centered voice. Hanson has spent more than five decades reporting on issues that shape the Northland.
