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Finance committee: council has left much of five‑year tax‑cap allowance unused amid revaluation
Summary
Finance Director Mr. Sullivan told the Rochester City Council Finance Committee on Jan. 14 that over the past five fiscal years the city has used roughly half of the allowable tax‑cap increases and that revaluation, school aid shifts and enterprise fund pressures explain recent changes in rates and budgets.
On Jan. 14, 2025, the Rochester City Council Finance Committee heard a presentation from Mr. Sullivan, finance director, summarizing the city’s tax‑cap allowance, tax effort and budget drivers from fiscal 2021 through fiscal 2025.
Mr. Sullivan said the council had the authority to raise about $22,000,000 under the tax‑cap allowance over the last five years but applied roughly $12,500,000. "And, every year for the last 5 years the council has adopted a operating budget city and school operating budget that is below the tax cap," he said, citing annual surpluses in the allowance that do not compound.
The presentation aimed to explain why revaluation and apparent tax‑rate shifts can seem larger than changes in the actual amount to be raised by property taxes. "The percent change in the amount to be raised by taxes from that tax year period is a little under 8,000,000," Mr. Sullivan said, explaining the amount had increased by about $8 million — an 11.7% change — from FY21 to FY25.
Why it matters: the committee sought context after a citywide revaluation that lowered the nominal tax rate while the total amount to be raised and budget pressures changed. Mr. Sullivan framed the figures to show the city’s property‑tax levy has risen, but overall budgets grew less than inflation over the same period.
Key figures and drivers cited - Allowable tax‑cap increases (five years): about $22,000,000; applied by council: about $12,500,000. Mr. Sullivan said roughly $9,900,000 of allowance remained unused and "it never compounds." - Annual allowance surpluses cited in presentation: $16,000 in FY21; about $1,000,000 in FY22; $2,000,000 in FY23; $5,500,000 in FY24; and a little over $1,000,000 in the most recent adopted year. - Jurisdictional shifts (FY21→FY25): city tax effort down ~ $300,000; county tax effort up ~ $1.7 million; local school tax effort up ~ $6 million; state school tax effort up ~ $400,000. Mr. Sullivan attributed much of the school increase to a drop in the adequacy of education grant, which he said fell from about $27,000,000 in 2021 to about $24,000,000. - Overall adopted budgets: cited increase from approximately $141,000,000 in FY21 to about $161,000,000 in FY25, with a significant portion of growth driven by water and sewer (enterprise) funds and related debt service. - Inflation comparison: Mr. Sullivan said the cumulative CPI for the period approached 20%, while the city’s budgets rose roughly 14% over the same span.
Council questions and clarifications Councillor Walker and Councilor Sullivan asked for clarification about year‑to‑year changes in the tax rate lines and about how state school aid shifts affected the city rate; Mr. Sullivan explained that shifts in state and local school efforts caused the changes and that some year‑to‑year moves reflect one‑time adjustments by the state that were later reversed.
Context and next steps Mr. Sullivan offered to provide additional breakdowns of school non‑property revenue differences if the committee wished further detail. The presentation was intended to provide a baseline for later budget discussions as the committee and public consider impacts from the recent revaluation.
Ending: The committee thanked Mr. Sullivan for the report and moved on to subsequent agenda items.
