ROCHESTER – The proposed 2025 city budget calls for the largest year-over-year increase in Rochester’s property tax revenue in more than a decade.

The Rochester City Council will consider a proposed $689.4 million budget during its study session at 3:30 p.m. Monday in the council chambers of the City and County Government Center, 151 Fourth St. SE.

During the meeting, City Manager Alison Zelms is expected to provide an update and outline the changes since the biennial budget was passed last year, focusing on meeting established goals and addressing changing conditions.

“In addition to our focus on continuous improvement and strategic investments, the 2025 supplementary budget prioritizes funding for the promotion of key services and the improvement of structural security within the budget,” she wrote in the 2025 budget recommendation to the Council.

The budget proposal broadly follows the two-year plan approved last year, which predicted a necessary tax increase of nearly 8.6 percent for next year to cover costs.

The proposal presented Monday calls for a potential 10.4% increase, which would raise $112 million in property taxes next year, compared to $101.5 million this year.

In the recommended budget report, Zelms states that the increase in the proposed levy was largely due to increased public safety spending and the decision to replace the aging Silver Lake Pool rather than permanently close it.

The amount of the tax increase will not directly increase the tax bill. The proposed tax amount is equal to the total tax collected across the city. So part of the new tax will be generated by new construction and the shift in tax values ​​between residential and commercial properties will also impact where an additional tax burden is recorded.

“The total tax amount will be distributed among the properties whose value absorbs the tax adjustment first,” Zelms wrote in the budget report. “Other properties, depending on the category (apartment, commercial, residential, agricultural, industrial, etc.), will be absorbed in proportion to how the assessed value has changed for the category and each individual property. Properties with increased value will absorb a larger portion of the tax – whether the value stays the same, increases or decreases.”

Olmsted County will provide taxpayers with estimates of the levy’s impact after the City Council and other taxing authorities approve a preliminary levy next month.

Of the city’s proposed tax increase, staff said 9.5% more taxes – or about $9.6 million – would be needed to continue existing city services due to rising costs, including a projected $14.4 million increase in personnel expenses, with more than half of that additional cost going to public safety.

The remaining levy increase request is reportedly tied to expenses for deferred maintenance, equipment needs and service improvements, including plans for the Silver Lake Park swimming pool.

Other recommended spending calls for hiring six more city employees – two public safety dispatchers, a street construction worker, a community development specialist, an internal auditor and a library security specialist. Some of the personnel costs will be offset by other revenue, according to the budget report.

While some increased spending is expected to require additional tax revenue, the amount will be partially offset by $713,000 in federal funds made available to the city during the COVID pandemic. The majority of the $6.2 million in federal funds have been used for efforts to reduce potential tax increases since 2022, with about $1 million remaining to be used in 2025 and 2026.

On Monday, the council will be asked to comment on the budget recommendations. All suggestions will be considered before the council is asked to approve the preliminary tax levy at its next regular meeting on September 9.

The preliminary levy limits the potential tax that can be collected next year. The final city budget for 2025 is scheduled to be considered along with the final levy assessment following a budget hearing on Dec. 2.

The following meetings are planned for the week of August 26th:

Rochester

• Outside Agency Oversight Committee, Monday at 1 p.m. in Room 104 of City Hall, 201 Fourth St. SE.

• City Council study session, 3:30 p.m. Monday in the council chambers of the City and County Government Center, 151 Fourth St. SE. The meeting will be live-streamed at rochestermn.gov/meetings/council-meetings and available on Spectrum cable channels 180 or 188.

• Public Utility Board, Tuesday at 4 p.m. in the Rochester Public Utilities Community Room, 4000 East River Road NE.

• Heritage Preservation Commission, Tuesday, 5 p.m. in the Council Chambers of the Government Center.

• Planning and Zoning Commission, Wednesday, 5 p.m. in the Council Chambers at the Government Center.

Olmsted County

• Facilities and Building Operations Officer Training, Tuesday, 5:00 p.m., 2118 Campus Drive SE.

• Rochester-Olmsted Council of Governments, Wednesday noon in Conference Room 186, 2122 Campus Drive SE in Rochester.