City of Rochester Proposing Smaller Tax Levy Increase For Smaller 2026 Budget

Rochester, MN (KROC-AM News)- The Rochester City Council will hear a recommendation for the 2026 city budget for the first time on Monday. 

See Also: Civic Center Dr. to Close in Downtown Rochester 

Staff will present the elected leaders with the recommendation during a study session. Councilmembers will also be shown the budget during meetings scheduled for September 3 and September 15. 

The council will then vote on setting the maximum tax levy increase on September 22 before voting on the final budget in early December. 

Rochester Proposing 5.9% Tax Levy Increase, 2026 Budget Over $50 Million Less Than 2025

City staff is recommending a 5.9% tax levy increase to bring the tax levy up to $118.2 million to help fund the $663.85 million budget. The proposed tax levy hike is nearly half of the 10.68% increase approved for the $719,842,871 2025 budget. 

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The proposed tax levy hike does not mean everyone’s property taxes will increase by 5.9% in Rochester.

“The projected local tax rate change is 0.16%. The impact on individual property owners will vary based on property value, classification and overall tax base growth,” a news release issued by the city says.

A presentation set to be shown to the council Monday indicates $417.7 million is earmarked for operations, $220.1 million is dedicated for capital improvement projects and $26.1 million will go towards debt servicing. 

A proposed 6% in electric rates and 9% hike in water rates is also included in the budget proposal. Those rate hikes are part of Rochester Public Utilities' possible 30% electricity rate increase over the next five years. 

Read More: Electric Rates in Rochester Could Rise by 30% Over Next 5 Years 

A news release issued by the city says the tax levy increase is needed to continue supporting essential city services.

The presentation says the increase will cover additional costs created by inflation, labor cost increases, paid medical leave implementation and other rising costs.