It is widely known that carbon emissions are harmful to the environment and societal well-being. One policy response is a carbon fee that will price in the negative externalities of emissions. Our master’s project designed and modeled the impact of a $5/ton carbon fee on municipal operations in the City of Ann Arbor. For methods of analysis, we conducted interviews, reviewed case studies, and analyzed the City’s current greenhouse gas inventory data. We constructed an Excel-based model to show that a carbon fee can generate significant cost and energy savings for city departments over the next ten years. Furthermore, a carbon fee drives multiple other benefits, like the ability to incentivize energy-conserving behavior among City employees and finance energy efficiency upgrades in municipal buildings. The program is currently being proposed by the Office of Sustainability to City Council for adoption in the FY2021 budgeting process.