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Rochester council adopts 2026 budget and $118.3 million levy after debating cuts
Summary
After hours of debate and multiple failed amendments, the Rochester City Council approved a five-part motion adopting the 2026 operating and utility budgets, a $118,284,623 property-tax levy and a capital improvement plan; the measure passed 6–1 with Council member Palmer dissenting.
Rochester — The City Council voted 6–1 on Dec. 1 to adopt a five-part package that includes the 2026–27 operating budget, a 2026–31 capital improvement plan, a 2026 general tax levy of $118,284,623, the 2026–27 electric and water utility budgets, and related rate and tariff adjustments.
Administrator Zelms told the council the all-funds budget before the body totals $693,400,000, with approximately $421 million for day-to-day operations and about $246 million in capital projects. Zelms said the levy represents roughly a $6.6 million increase over the prior year and that the recommended net tax-capacity rate the city expects would be about 50.39% if adopted.
The vote followed a lengthy public hearing and several rounds of council amendments. Two members of the public addressed the levy: James Anklin, who identified himself as the owner of an affordable rental property, said local fees and taxes drive up operating costs for small landlords; Molly Dennis urged the council not to raise property taxes without detailed, itemized reports and audits of city spending. "We need audits. We need receipts," Dennis said during the hearing.
Council debate focused on where to find budget cuts. Council member Palmer proposed using $500,000 in contingency funds from 2025 and sought to eliminate or delay several new positions — including an ADA management coordinator, a north‑arrival center maintenance position and an arborist — and proposed a $245,000 cut to the library budget. Staff and the mayor warned that applying one‑time contingency dollars to ongoing expenses risks pushing the cost into future levies and could threaten the city’s AAA bond rating if reserves fall below accepted levels. Zelms explained contingency and reserve mechanics and said using one‑time funds for ongoing expenses would require offsetting cuts in 2027 or an added levy then.
Rochester Public Utilities General Manager Tim McCullough also answered council questions about proposed utility rate increases. McCullough said a 4% electric and 9% water rate increase in the recommended budget supports major capital projects including a roughly $33 million advanced‑metering investment and preliminary costs tied to a planned replacement power project. "Most all of the wholesale decreases that we will experience next year will be rededicated towards that future debt service," McCullough said, citing a long‑term power‑supply investment.
After failing to reach the reductions Palmer sought in separate roll‑call votes, the council approved the consolidated five‑part motion. The final tally was 6 in favor, 1 opposed; Council member Palmer voted no.
What the budget does: The approved budget funds public safety, public works, parks and libraries, and a multi‑year capital-improvement program that includes the Rochester Public Utilities component. Zelms noted that the tax levy is about 17% of the all‑funds budget and that new construction helps absorb some levy pressure for existing taxpayers.
Next steps: City staff will implement the approved budgets and proceed with the adopted capital plan and utility rate schedule. The city will publish the adopted figures and related documents on its finance/budget web pages for public review.
