Rochester City Manager presented the proposed fiscal year 2026 operating and capital budgets at the council’s May 9 budget retreat, saying the total proposed budget is $337,280 below the property tax cap. Finance Director Mark Sullivan said the proposed spending package would lower the estimated tax-rate increase compared with earlier projections.

The City Manager said the proposed FY26 budget is “$337,280 below the tax cap.” Finance Director Mark Sullivan told the council the previous tax-rate estimate that produced a 67¢ increase assumed the full tax-cap yield was used and that backing out the unused yield “reduce[s] that estimated tax rate increase to approximately 62¢.”

Why it matters: the tax-cap calculation determines how much the city can raise through property taxes and shapes choices about staffing, capital projects and use of reserves. Councilors were told the proposed budget holds total spending to a 1.54% increase over FY25 and that non‑property revenues make up 43.94% of the general fund.

Sullivan described revenue lines the city will monitor. He said the city used $7.9 million of unassigned fund balance in FY25 and is proposing to draw $6.2 million in FY26, down from last year but above a target range he said would be preferable: “It'd be good to get back down to that $5,000,000 range of $5,500,000 range.”

Sullivan also reviewed other revenue assumptions: the city budgeted $3.2 million for rooms-and-meals receipts and flagged uncertainty in how the state will distribute collections if statewide totals change from the current DRA (Department of Revenue Administration) estimate of $137,000,000. He warned that legislation or changes in statewide totals could alter the municipal share. Sullivan noted auto-registration fees — which previously have produced almost $6 million annually — building permit revenue and interest income as other lines to watch.

Councilors asked for clarifications and timing: Councilor Walker asked when DRA posts the rooms-and-meals number; Sullivan said municipalities typically do not have a firm number until the December tax-rate setting but that the city will look for earlier reports if available.

What comes next: Council members were reminded that today’s committee-of-the-whole deliberations provide recommendations to the full council, with public hearings scheduled for May 20 and final adoption slated for June 3.