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Business owners raise concerns as new Rochester city budget passes

Council votes 5-1 to approve property tax levy and 2023 spending plan.

Downtown Rochester Minnesota
Downtown Rochester on Friday, July 1, 2022.
Joe Ahlquist / Post Bulletin
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ROCHESTER — Bruce Struve said a 9.1% increase to his property taxes adds to the challenges his business has faced in recent years.

The owner of Struve's Paint And Decorating said challenges for the store at the corner of North Broadway Avenue and Fifth Street started with the 2021 reconstruction of the streets that provided access to his business.

“Our customers have become fewer and fewer because they can’t figure out how to get to the store, much less find a place to park when they come to the store,” he told the council Monday during a hearing on the city’s 2023 budget.

On top of a $1,662 tax increase this year for a $19,974 total tax bill, Struve’s business has been assessed nearly $26,000 related to the Broadway Avenue project. The assessment payments are expected to be spread across 10 years, starting in April.

“We’d like to retire in the near future and lease our building to some young entrepreneur, but with the taxes and Broadway assessment, even this seems to be out of reach for many young people,” he said. “There has to be a stop on how high the taxes will be in Rochester.”

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Casey McGregor, owner of Spa Casey, said her property tax increase — $420 for a total of $4,140 — means she will have to work an additional six hours next year to cover her tax increases.

“I am fortunate enough that I am self-employed. and I can pick up and work a Sunday to get my extra hours,” she said, pointing out other property owners are on fixed incomes.

Downtown business owner John Kruesel echoed the concerns, pointing to a variety of recent downtown projects that have spent public funds.

“What are we getting in return for their expenditures,” Kruesel said, pointing toward Destination Medical Center projects.

He wasn’t the only person among six speakers to raise concerns about Destination Medical Center projects as the city sees a 6.85% increase in the overall property taxes that will be collected for a total of $92.7 million in the $600.9 million 2023 budget.

However, City Administrator Alison Zelms pointed out that no DMC projects are funded with property taxes, while approximately $8 million in property taxes will be used for $213 million in other planned projects and improvements citywide.

“We did seek to keep the levy low, not only this year but in prior years,” she said, pointing out that the city opted not to increase the levy in 2020.

Planned city budget relies on nearly $92.8 million in property taxes, which is a 6.85% increase compared to this year.

Of the $92.7 million to be collected in taxes next year, 8.6% is expected to be used for infrastructure and improvement projects.

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While the majority of the council voted to support the budget and related tax levy, council member Molly Dennis voted to oppose the city budget and tax levy for the second year.

“I don’t feel comfortable with this incredible increase to the tax levy,” she said, without offering suggested cuts.

She suggested the council consider holding public comment on spending plans earlier in the process next year.

Council member Shaun Palmer said the budget process that started with public meetings in April offered many council meetings with opportunities for residents to comment and offer insights, and other council members pointed to the fact that the budget is a direct reflection of policy decisions throughout the year.

“This budget belongs to the council,” council member Patrick Keane said, adding that many of the items referenced as “wasteful spending” Monday would not change the amount of levy needed to provide city services, since the city cannot necessarily move funds from one dedicated project or program to another.

Zelms said the budget seeks to continue to provide “vital and necessary services that our residents and businesses depend on,” while addressing a variety of tax impacts, including a $2.4 million reduction in state funds.

“We are seeing the impacts of the first-ever creation of a two-year budget document with the second year allowing us to focus on increased understanding, transparency and more intentional planning,” she said.

The budget passed on a 5-1 vote, with Dennis opposed and council member Kelly Rae Kirkpatrick abstaining.

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What happened: The Rochester City Council approved a $600.9 million budget for 2023, along with a plan to collect a total of $92.7 million in property taxes.

Why does this matter: The tax levy increase is 6.85% above what was collected in property taxes this year.

What's next: The council will start work on its next two-year budget in the spring.


Randy Petersen joined the Post Bulletin in 2014 and became the local government reporter in 2017. An Elkton native, he's worked for a variety of Midwest papers as reporter, photographer and editor since graduating from Winona State University in 1996. Readers can reach Randy at 507-285-7709 or rpetersen@postbulletin.com.
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