Mayor Malik Evans told the City Council’s Budget Finance and Governance Committee on May 28 that the city had to close a large shortfall to present a balanced proposed budget for 2025–26.

“We had to close a 97500000.0 dollars gap,” Evans said, describing a mix of lower federal ARPA support, weak sales tax and a high pension bill as the drivers of the gap.

The mayor and budget staff said the city kept service levels and avoided layoffs, but acknowledged the budget relies on a combination of one‑time and recurring sources that could change. The mayor noted the federal American Rescue Plan (ARPA) funds used in prior years are declining and warned that federal proposals could further reduce community development assistance; he said the administration would revisit priorities if federal cuts materialize.

Why it matters

The city’s revenue mix has shifted in recent years toward sales tax, making Rochester vulnerable to changes in consumer spending. At the same time the city’s pension payments have risen and ARPA—one‑time federal funding used during the pandemic—has sun‑set. That combination forced the administration to use fund balance and state aid in the proposed budget and to find operating efficiencies.

What officials told the committee

Budget director Suzanne Warren briefed council members on the ARPA timeline and on the condition of the city’s reserves. “We were able to encumber every single ARPA dollar as of 12/31/2024. So we are on track. Everything is currently encumbered,” Warren said, describing active project management to meet federal spending deadlines.

Warren also walked the committee through fund‑balance math for the current budget cycle: the city ended fiscal 2023–24 with roughly $117 million in fund balance, used about $31.2 million in 2024–25, and expects to restore at least $7 million — leaving roughly $67 million under the 2025–26 proposal after planned use. She said that figure would be close to the administration’s policy target: 12.5% of the general fund (about $66.4 million under the proposed general fund total).

Council members pressed officials on sales tax and contingency plans. Warren said the administration’s sales‑tax forecast is intentionally conservative and reflects lower consumer spending since federal pandemic stimulus waned. She said the city compares regional collections and works with Monroe County to set estimates, but acknowledged the line remains a key risk to deliverability.

What the budget does now

The proposed budget trims about $27 million from recurring revenue compared with the year before, the mayor said, largely because ARPA support is reduced and pension costs rose; the administration said it found roughly $7 million of operating efficiencies and delayed some capital work to rebalance the plan without layoffs.

The budget also includes a small contingency pool and a reserve for grant matching. Warren told council that the city is prioritizing encumbrances and projects tied to ARPA to meet the Treasury Department deadline for ARPA obligations, currently set for December 31, 2026.

What council members asked and what to watch

Council members repeatedly asked whether cuts at the federal or state level would force mid‑year reductions and what actions the administration would take first. Officials said they would exhaust other revenue and reserve options before reducing core services, and they committed to providing specific options in writing if a material cut occurs.

Council members also requested line‑by‑line detail on ARPA, the composition of the fund balance, and the assumptions behind the sales tax forecast; the administration agreed to provide those analyses in writing to the committee.

Bottom line

The administration presented a balanced proposed budget that maintains existing service levels and avoids layoffs, but it does so with one‑time and risk‑sensitive assumptions—encumbered ARPA projects, conservative sales‑tax estimates and use of reserves. Officials told council they will update elected leaders if federal or state actions alter the revenue picture and that fund balance will be the key buffer to watch.

Several council members signaled they will probe contingency options and asked staff for more transparent, auditable explanations of assumptions and spending plans as hearings continue.