Rochester’s Proposed 2024 Budget Accounts for Price Hikes, Includes Tax Levy Increase

Rochester, MN (KROC-AM News)- The Rochester City Council got its first look at the city’s proposed 2024-2025 budget. 

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Rochester City Administrator Alison Zelms presented the proposal to council members during a study session Monday afternoon. City staff briefed council members on the factors that influenced the budget proposal. 

The preliminary budget proposal calls for raising the city’s tax levy to $101.5 million, a 9.44% increase from 2023, which is above the 5% increase the city typically plans for to keep up with labor costs and price increase fueled by inflation.

A news release issued by the city following the study session says the main factors that are leading to the larger than usual proposed tax levy increase are costs for a new software license for the Rochester Police Department and increasing costs of materials for street maintenance. The proposal also aims to solve issues the city has had with its vehicle and equipment maintenance fund. 

 “Every year, throughout the budget cycle, the City team strives to foster a culture of cost mitigation and continuous improvement. We assess the needs and demands across all areas of the City and direct the necessary resources to the most pressing needs while not being overly reliant on additional levy funding to accomplish quality outcomes. These continuous improvements have impacts across the City, and while they do not reduce or eliminate the need for tax levy and utility rate increases, they significantly change the timing and amount of cost escalation while still providing quality service,”Zelms said in a statement. 

City officials also reminded the public that the proposed 9.44% property tax increase is, “ spread across properties based on the value construction will absorb the tax adjustment first and then other properties will absorb based on category (apartment, commercial, residential, agricultural, industrial, etc.) proportionately to how assessed value for the category and each individual property has changed.” 

The city’s property taxes account for about one-third of a Rochester resident's total property tax bill, with Olmsted County, Rochester Public School District and State of Minnesota being the other property tax collectors.

The Rochester City Council is scheduled to hold a second study session regarding the proposed $575.4 million budget on August 28. The full budget proposal is available by clicking here.