Rochester tax levy cap continues to be weighed

Sep. 14—It remains unclear whether the Rochester City Council is comfortable enough with capping the city's potential property tax collection at $86.8 million for 2022, which is a 6.5 percent increase from this year.

Two council members — Shaun Palmer and Patrick Keane — said Tuesday they are comfortable with the preliminary levy for the decision that needs to be made by the end of the month.

Two other council members — Mark Bransford and Molly Dennis — said they would prefer to find ways to cut the potential need for property tax funds.

"I believe something else can be done," Dennis said, adding that she's unsure what can be cut from the current $494.4 million budget proposal.

Bransford said he'd like to see the city seek to trim expenses outside what is dedicated to police and fire departments.

"What I'm looking for is there, in your estimation, any low-hanging fruit that could be plucked in order to even make a small dent in that 6.5 percent?" he asked City Administrator Alison Zelms.

Zelms said it would be difficult to reduce the property tax without cutting services since the city is already planning to use nearly $1.47 million in federal funds to reduce what would have been an 8 percent or greater tax levy increase for this year.

"We did smooth the impact on the taxpayer," she said of the plan.

Three council members didn't indicate whether they plan to support the preliminary levy, which is used to generate proposed tax bills for property owners, but could be lowered before the end of the year.

Zelms said further reductions to the current budget proposal would require cuts in services or shifting expenses to future years.

"I would be concerned about bringing you a budget this year that created a huge hurdle for you next year," she told the council.

The majority of the council members said they'd like to hear from residents as they prepare to set the cap on property taxes that will be collected in 2022, with some calling for a public hearing next week before action is taken on setting the preliminary levy.

"I'm definitely in support of giving people an opportunity to come and share what they feel is working well, what isn't and how best to guide our dollars," Council President Brooke Carlson said.

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What happened: The Rochester City Council continued budget discussions during a work session Monday.

Why does this matter: The council is required to establish a maximum property tax levy by the end of the month. The total amount of property taxes collected could be reduced by the end of the year, but it will not be allowed to increase for the 2022 city budget.

What's next: The council will vote on the proposed preliminary levy at its 6 p.m. meeting on Sept. 20.

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Council member Nick Campion, who said more work needs to be done, but didn't voice opposition for the proposed cap, said it's important to note the complexities of how the tax rate is set.

"It is a complex topic, and it can be challenging to have a complex conversation in this venue," he said, noting property assessments are not a city function and other requirements are guided by the state.

Zelms said the nuances mean individual property taxes will not increase specifically in line with the tax levy increase.

"Each tax bill will be different," she said, noting it depends on any value increase assessed for a property and the number of added value seen as the result of development.

"Even during your flat levy year, everyone's tax adjusted differently," she added.

She said the budget will continue to be adjusted and the potential taxes reflected in future notices could drop.

"There is still time," she said, noting the final budget does not need to be approved until December.