Knowledge Base

September 9, 2024 – ROCHESTER, MINN. – The Rochester City Council certified the 2025 Preliminary Tax Levy and Supplemental Recommended Budget during the September 9 City Council meeting. Certifying the 2025 preliminary tax levy of $111,645,142 includes the establishment of the preliminary 2025 Operating and Capital Budget amount of $689,022,783, as well as set Monday, December 2 as the date for the public hearing and final adoption of the recommended 2025 Tax Levy and Budget. 

Reductions made by the Council during the meeting bring the 2025 recommended preliminary property tax levy amount increase over the prior year to 9.96%. This is a reduction of $396,810 from the original proposed 10.35% increase in the levy amount, which is the increase in the total amount of levy collected from 2024 to 2025, not the tax rate. Based on additional information from the Olmsted County Assessor received on September 3, 2024, the anticipated net tax capacity rate is increasing by 1.80% based on the reductions made tonight. Some key driving factors influencing the total levy are:

• Increasing personnel costs related to labor contracts for existing personnel;
• Increasing personnel costs related to one-time market adjustments for Police and Fire for additional labor contract negotiations;
• Expanding the Silver Lake Pool;
• Accomplishing the second step of the evolving Fire Response model; and
• Reducing the overall levy increase to below 10%, including a reduction in City Council training funding, not proceeding with an internal auditor position, and delaying the purchase of a snow groomer at Gamehaven Park.

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 when 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.  

Notably, 0.7% of the tax levy increase is directly related to the declining availability of one-time holistic budget stability funds. Other investments are also recommended in funds that do not rely on tax levy. The $10,114,269 levy change represents the year-over-year change in total levy certified for collection to the County in order to provide revenue to support the recommended 2025 budget. The levy (dollar amount) is certified by Olmsted County and then applied across all properties based on tax classification. Then, the assessed valuation of each property serves as the basis for tax notices sent to each individual property owner. The forthcoming tax notices help to inform more specific public comments on the tax levy during the established public hearing.

As part of the presentation, City teammates highlighted a variety of state programs that 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 meeting packet and recording are available online.

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This story is also available on the City website.