ROCHESTER — A proposed 2025 city budget includes the steepest year-over-year increase to Rochester’s property tax collection in more than a decade.
The Rochester City Council will review a proposed $689.4 million budget during its study session at 3:30 p.m. Monday in council chambers of the city-county Government Center, 151 Fourth St. SE.
During the session, City Administrator Alison Zelms is expected to provide updates and outline changes seen since the two-year budget was adopted last year, focusing on meeting established goals and addressing evolving conditions.
“In addition to our emphasis on continuous improvement and strategic investment, the 2025 supplemental budget prioritizes funding to promote core services and improve structural security within the budget,” she wrote to the council in
the 2025 budget recommendation.
The proposed budget largely holds to the two-year spending plan approved last year, which predicted the need to increase the tax levy by nearly 8.6% next year to offset costs.
The proposal being presented Monday calls for a potential 10.4% increase, which would collect $112 million in property taxes next year, up from the $101.5 million this year.
In the recommended budget report, Zelms states the increase in the projected levy largely stems from increased public safety expenses and the decision to replace the aging Silver Lake Pool, rather than closing it permanently.
The rate of levy increase doesn’t directly translate to an increase in tax bills. The proposed levy amount is the total tax collected throughout the city, so new development will generate some of the new tax and shifting tax values between residential and commercial properties will also affect where any added tax burden is seen.
“The total tax amount is spread across properties based on the value construction will absorb the tax adjustment first,” Zelms wrote in the budget report. “Other properties will absorb based on category (apartment, commercial, residential, agricultural, industrial, etc.) proportionately to how the assessed value for the category and each individual property has changed. Properties with increased value absorb more of the tax — whether it stays the same, increases, or decreases.”
Olmsted County will provide taxpayers with estimates of the levy impacts after the City Council and other taxing bodies approve a preliminary levy next month.
Of the city’s proposed tax levy increase, staff reports a 9.5% levy increase — approximately $9.6 million — would be needed to continuing existing city services, due to rising costs, which include a projected $14.4 million increase in employee-related expenses, with more than half the added cost tied to public safety.
The remaining request for a levy increase is reportedly tied to expenses for addressing deferred maintenance, equipment needs and service enhancements, including plans for Silver Lake Park’s pool.
Additional recommended expenses call for the addition of six city employees — two public safety dispatchers, a street-equipment operator, a community development specialist, an internal auditor and a library safety and security specialist. Some of the employee costs are offset by other revenue, according to the budget report.
While some increased expenses are expected to require added tax revenue, the amount is being partially offset by $713,000 in federal funds provided to the city during the COVID pandemic. The majority of the $6.2 million in federal funds has been used in efforts to reduce potential tax levy increases since 2022. Approximately $1 million remains to be used in 2025 and 2026.
On Monday, the council will be asked to provide feedback on the budget recommendations. Any input is expected to be factored in before the council is asked to approve the preliminary tax levy during its next regular meeting on Sept. 9.
The preliminary levy caps the potential tax to be collected next year. The final 2025 city budget, along with the final levy determination, is slated for consideration following a Dec. 2 budget hearing.
Meetings scheduled to be held during the week of Aug. 26 include:
Rochester
• Outside Agency Oversight Committee, 1 p.m. Monday in room 104 of City Hall, 201 Fourth St. SE.
• City Council study session, 3:30 p.m. Monday in council chambers of the city-county Government Center, 151 Fourth St. SE. The meeting will livestream at
rochestermn.gov/meetings/council-meetings
and be available on Spectrum cable channel 180 or 188.
• Public Utility Board, 4 p.m. Tuesday in the Rochester Public Utilities community room, 4000 East River Road NE.
• Heritage Preservation Commission, 5 p.m. Tuesday in council chambers of the Government Center.
• Planning and Zoning Commission, 5 p.m. Wednesday in council chambers of the Government Center.
Olmsted County
• Commissioner education with Facilities and Building Operations, 5 p.m. Tuesday at 2118 Campus Drive SE.
• Rochester-Olmsted Council of Governments, noon Wednesday in conference room 186 at 2122 Campus Drive SE in Rochester.
