Rochester City Council adopts 2025 budget

(ABC 6 News) — The Rochester City Council adopted the 2025 Supplemental Budget at the December 2 City Council meeting.

The 2025 City of Rochester and Rochester Public Utility (RPU) Water and Electric Utilities budgets total $719,842,871. That total includes $394,179,716 for operations, $292,827,356 for capital improvements, and $32,835,799 for the debt service fund. Of the total amount, the final adopted 2025 levy will support $111,645,142 in expenses.

Based on information from the Olmsted County Assessor received on September 3, 2024, the tax rate change is 1.80%. The City’s “Budget in Brief” is a resource for the community to learn about the budget process and expected expenditures and revenues for the coming year.

City Administrator Alison Zelms shared via a press release, “The City team remains committed to fiscal sustainability and maximizing resources to make informed decisions to best serve Rochester’s residents, businesses, and visitors. We are vigilant in managing expenses and have already begun forecasting for 2026 and 2027. The 2025 budget includes substantial investments in public safety, aimed at ensuring we are fully staffed and equipped to serve the community effectively.”

Some key driving factors influencing the total levy are:

• Increasing employee costs related to labor contracts for existing employees;
• Increasing costs related to one-time market adjustments for Police and Fire;
• Reconstructing the Silver Lake Pool; and
• Accomplishing the second step of the evolving Fire Response model that provides additional emergency response coverage in the community and preserves low insurance rates.

The tax classification system is established by the authority of the State of Minnesota, not the City of Rochester. This video shows more about how Property Taxes are calculated. The City of Rochester’s average estimated market value for a median-value home, with the average increase in assessed value from 2024 to 2025 is $288,200. The net tax impact in this scenario for 2025 is $1,328.12, or $52.72 more than in 2024. Key points to note include: 

• The net tax change on a Median Value Home for 2025 is $52.72 or 4.13% more than 2024.  
• State law has adjusted the homestead market value exclusion reducing the tax impact on moderately valued homes.  
• The local tax rate remains relatively consistent compared to prior years and remains lower than pre-2020 rates.  
• The local tax rate increase from 2024 to 2025 is 1.80% and below our historical 10-year average.  

Several state programs may help reduce property tax costs for local property owners:

• Olmsted County, the agency that values and classifies property and collects the property tax, provides valuable information to help understand the property tax system, as well as connect taxpayers to tax deferral and relief programs for which they may be eligible, some of which are also administered in part by the County in accordance with state law. Broad information about property taxes can be found here: Olmsted County – Property Taxes
• More detailed information about County administered exemption and relief programs (Blind Disabled Homestead, Disabled Veterans Exclusion, Homestead Exclusion, Nursing Homes, and Boarding Care) can be found here: Property Tax Discounts and Exemptions
• Additionally, the tax relief programs that are provided for by state law can be viewed in their entirety at the MN Department of Revenue website at this link: Minnesota Department of Revenue – Property Tax Programs

The Rochester City Council certified the 2025 Preliminary Tax Levy and Supplemental Recommended budget at the September 9, 2024, meeting. The meeting packet and recording, as well as the press release about the decision, are available online.