Rochester proposes a 21% increase in city spending next year, major tax hike

ROCHESTER – Property owners could feel the effects of the largest annual tax increase in more than a decade under a plan proposed by Rochester officials to boost the city budget by $120 million next year.

Rochester officials are recommending nearly a $690 million budget for 2025, up from more than $570 million this year. The increased funding is in response to increasing costs in most city departments as well as capital project costs and new revenue from a renewed local sales tax referendum.

Under the proposal, Rochester’s tax levy would increase by about 10.4% (or about $10.5 million). That’s up from city officials’ estimates earlier this year, but it could have been even larger.

“We try to control as much as possible our property taxes but it just gets more challenging as you’re serving more people,” City Administrator Alison Zelms said Monday during a City Council meeting.

The council is expected to set a preliminary budget and levy during its Sept. 9 meeting; council members will finalize the 2025 budget and levy at the end of the year.

Zelms told the council the levy increase comes after the city agreed to pay hikes in public safety contracts. Police pay held relatively steady during the COVID-19 pandemic, but Zelms said the city’s pay was significantly lower compared with other cities as departments across the U.S. struggle with an ongoing workforce shortage.

Some of the levy will be offset by new property added onto the tax rolls, while property owners with increased valuations will shoulder more of the burden.

“[It] just seems so large when so much of it is out of our control,” Council Member Norman Wahl said.

Staffing costs make up about $14.4 million of the increased budget, with about a third of that stemming from new police contracts. The city plans to add six positions as part of the 2025 budget, including a security officer at Rochester Public Library that used to be paid for through a grant.

“That’s one of the bugaboos I have with grant funding is that we get it, and then we’re going to keep it in the budget,” Council Member Shaun Palmer said. “That’s what worries me when we accept grants.”

Palmer said he supports the levy increase but questioned why some spending, including library security, was necessary. Library officials say security has been necessary since the number of incidents requiring police has increased in recent years, including times when people used drugs in the bathroom. Kim Edson, the library’s deputy director, called the position critical to continued operations.

Other council members urged city officials to find ways to shrink next year’s budget. Molly Dennis asked for more financial auditing while Wahl suggested the city not fill jobs lost through retirements or staff leaving.

But cutting jobs through attrition isn’t so simple. Freezing hiring that way would unevenly affect departments and could run afoul of state labor laws requiring a certain number of police officers or other employees hired and on duty.

“You run into this wall of, ‘OK, what do you cut?’” Council President Brooke Carlson said. “It’s an impossibly hard conversation.”