City's budgets pass below tax cap, with help of $6M from unassigned fund balance

ROCHESTER - Rochester's City Council on Tuesday adopted the FY26 operating budgets for the city, county, school district, enterprise funds and special revenue funds. The city, county, and school district operating budgets are subject to an annual tax cap allowance.

The city manager's originally proposed operating budgets for the city, county, and school district were $337,280 below the tax cap allowance. The City Council made additional reductions, resulting in adopted FY26 budgets that are $931,000 below the tax cap.

This marks the fifth consecutive year that City Council has adopted an annual operating budget below the tax cap allowance. The cumulative total of budgets adopted below the tax cap over the past five years is $10.8 million.

The adopted FY26 City operating budget includes the use of $6.2 million from the General Fund Unassigned Fund Balance. The City Council approved this allocation to help stabilize the amount to be raised by taxes and to mitigate impacts associated with the city-wide revaluation process. Additionally, the Council approved the use of $300,000 from Capital Reserve Funds, further stabilizing the property tax burden.

The estimated 2025 tax rate increase is 0.39 cents. The projected annual impact on the median assessed value is as follows:

• Single-family homes ($376,300): $147
• Condominiums ($244,000): $95
• Manufactured/mobile homes ($149,500): $58

The City Council also adopted the FY26 Capital Improvements Plan totaling $37,491,607. This plan includes a range of capital improvement projects for the City, School District, Water Fund, Sewer Fund, and Tax Increment Financing Districts.

First-issue property tax bills are estimated to be mailed on June 16 with a due date of July 16.