1. Adopting a Resolution certifying the 2027 preliminary tax levy of $124,901,338 which includes:
   • Establishing the preliminary 2027 operating and capital budget amount of $799,283,832.
   • Establishing Monday, December 7, 2026, for the public hearing and final adoption of the 2027 supplemental tax Levy and budget (operating and capital improvement plan).
2. Approving $100,000 funding for Any Path Home from the 2025 Statewide Affordable Housing Aid Fund (SAHA) funding received that currently resides in the 2015 Local Housing Aid CIP.

Minnesota law requires that local governments execute the following budget-related actions: adopt a 2027 preliminary property tax levy by September 30, 2026; adopt a preliminary 2027 budget amount; and establish a date for a public hearing regarding the proposed 2027 supplemental recommended budget (operating and capital improvement plan). The final adoption and recommended public hearing date will occur on December 7, 2026.

The 2027 recommended preliminary property tax levy amount increase over prior year is 5.59%. This is just the increase in total amount of levy collected from 2026 to 2027. It is not a tax rate.  Some key driving factors influencing the total levy are:

• Increasing personnel costs related to labor contracts for existing personnel;
• Increasing personnel costs related to previously approved decision packages;
• 5% depreciation previously approved for active equipment revolving assets; and
• Partially offset by full cost allocations to Enterprise Funds and Rochester Public Utilities in 2027.

Other investments are also recommended in funds that do not rely on tax levy.

Link: The 2027 Supplemental Recommended Budget (Operating and Capital Improvement Plan)

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State law requires that a total budget figure be listed at this time, although the final adopted figure is not restricted by the amount listed above. However, the preliminary levy creates a ceiling and can only be maintained or decreased (not increased) after the adoption of the preliminary levy.

The $6,616,715 levy change represents the year-over-year change in total levy certified for collection to the County to provide revenue to support the 2027 supplemental recommended budget (operating and capital improvement plan). The levy (dollar amount) is certified with 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.

The tax classification system is established by the authority of the State of Minnesota, not the City of Rochester. The total budget, level of service, services provided, and the tax levy needed to support those services is within the purview of the City Council. Additionally, there are limitations on the other fees, types of taxes, and use of other types of taxes that are levied. For example, the local sales tax is subject to state statute and only for restricted purposes (not operations).

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. General information about property taxes can be found here:

Link: 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:

Link: Property Tax Discounts and Exemptions

Additionally, the tax relief programs that are provided can be viewed in their entirety at the MN Department of Revenue website at this link:

Link: Minnesota Department of Revenue - Property Tax Programs

Review the Study Session budget presentation videos by going to the City Council Meetings page and clicking on the "Video" archive next to the respective meeting date in the "Past Meetings & Video Archives" section. Review all the 2027 budget presentations using the link below:

Link: 2027 Budget Related Presentations

The budget is the City's most important policy setting exercise and reflects the Council's Strategic Priorities. The 2027 budget information has been shared with the City Council, and their priorities and preferences have been considered and prioritized appropriately.

The preliminary tax levy must be adopted prior to September 30, 2026, in accordance with state statute. After the adoption of the preliminary tax levy, the levy may decrease but cannot increase through the time of final adoption.

September 14, 2026: Study Session - Presentation 2027 Supplemental Recommended Budget

August 24, 2026: Study Session - Presentation 2027 Supplemental Recommended Budget

July 13, 2026: Study Session - Presentation 2027 Supplemental Recommended Budget

April 13, 2026: Study Session - Presentation 2027 Supplemental Recommended Budget 

2026-2027 Budget Related Presentations

The City Council's action of adopting the 2027 preliminary tax levy and supplemental recommended budget (operating and capital improvement plan) establishes the maximum 2027 tax levy for the City of Rochester.

Each of the presentations brought before the Council leading up to this preliminary adoption have outlined the various trade-offs in the City's ability to deliver services. Alternative actions could include:

1. Adopt a lower preliminary levy to be reflected in budget notices and direct staff to have a Study Session to discuss recommendations for budget reductions.
2. Adopt the recommended preliminary levy and direct staff to have a Study Session to discuss potential reductions for the final levy certification planned for December 7, 2026.