City Council Study Session - August 24, 2026: Budget, Transit, and Economic Mobility Updates
City Council Study Session - August 24, 2026: Budget, Transit, and Economic Mobility Updates
The Rochester City Council held a study session on August 24, 2026, beginning at 3:30 p.m. The meeting covered three main agenda items: the 2027 Recommended Supplemental Operating Budget, Rochester Public Transit's financial outlook and performance, and an update on the Economic Mobility program. Council members discussed proposed tax levy changes, transit reliability and funding, and workforce alignment strategies. No formal votes were taken; the session was for discussion and direction to staff.
Discussion Items
2027 Recommended Supplemental Operating Budget
City staff presented the recommended supplemental operating budget for 2027. The total all-funds budget is $799.3 million, with a tax levy recommendation of $124.9 million, a year-over-year increase of 5.59% (down from the 7.4% originally projected). The tax levy funds about 15% of the total budget. Key rate changes include: Rochester Public Utilities electric rate recommendation reduced from 6% to 4% (average customer impact ~$5/month), water rates at 9% ($1.78/month average), and sewer at 1%. The budget includes decision packages totaling 1.15% of the levy adjustment, primarily for a community services police officer and outreach specialist. The long-range forecast shows potential higher levies in 2029-2030, including bonding for a new fire station (Station Six) in 2030.
Council members discussed several topics:
- Elected Official Communication Tools: Council members debated the need for improved communication platforms (IndieGov, Granicus, etc.) to allow personalized outreach to constituents. Mayor Norton emphasized the importance of reaching constituents and noted that current systems are impersonal. Councilmember Keeney raised style differences among members. Staff indicated that a policy framework is needed before recommending a specific tool.
- Elected Official Budget Funding: Discussion covered the mayor's $36,000 discretionary initiatives fund versus council's need for approval on similar initiatives. Council President Schubring and Councilmember Miller suggested exploring a combined mayor-council budget for future years, especially given the upcoming mayoral transition. Councilmember Palmer expressed opposition to a 3% raise for council.
- Strategic Planning and Budget Engagement: Staff outlined plans for an RFP for consultant support to align strategic planning with the next two-year budget (2028-2029) and improve community engagement.
- Summer Festivals and Destination Marketing: The city’s investment in events like Fourth Fest, Rochester Fest, and Riverside Forward was reviewed. Staff proposed a $300,000 enhanced destination marketing investment, partially tied to Chateau Theater activation. Councilmember Miller raised concerns about coordination between multiple downtown events.
- Tax Levy Direction: Councilmember Palmer proposed reducing the levy increase from 5.59% to 5.21% (a cut of approximately $400,000), while Councilmember Doring signaled a future ask of about $100,000 for the AnyPath Home initiative. Councilmember Keene expressed concern about the long-term reliance on property value growth to keep the tax capacity rate low.
Rochester Public Transit (RPT) Financial Outlook and Performance
Director Rachel Fouch presented a mid-year update. The transit fund currently has $5.6 million, with a projected 2026 loss of $0.8 million (improved from prior forecast of $2.4 million due to CIP reductions and operator contract changes). The fund is projected to be exhausted by 2028 if no changes are made, assuming the state's local match remains at 15% (historically 20%). Key performance indicators (KPIs) include operating revenue vs. targets and ridership metrics. Current ridership is down significantly from pre-COVID highs (2 million in 2019 to about 600k-700k), partly due to reliability issues and the loss of the IBM park-and-ride. The new operator, Via, will begin operations on September 1, 2026. Via’s McCall Houston outlined their planning philosophy, including shifting to microtransit for low-efficiency routes and increasing frequencies on high-efficiency routes. Link BRT is planned to start in summer 2027, but operating funding is not yet secured beyond a three-year pilot grant.
Council members expressed significant concern about reliability. Councilmember Palmer called it the "number one issue" and criticized the system's dependability, noting that missed trips undermine ridership. Councilmember Keene questioned whether the hub-and-spoke model is viable for a spread-out city and asked for systemic analysis. Councilmember Miller requested materials from Via’s successful redesign in Sioux Falls. Staff noted that if reliability does not improve, drastic service reductions may be necessary to ensure dependable service.
Economic Mobility Updates
Amanda Leitner, the new Economic Mobility Program Specialist, provided a six-month update. She defined economic mobility as the ability to improve well-being over time. Using data from the ICMA grant, the city identified four priority mobility areas: connected and reliable transit, affordable housing supply, career readiness/workforce systems alignment, and stakeholder coordination. After a prioritization process, career readiness and workforce systems alignment was chosen for deeper exploration and pilot work under the grant. Preliminary labor force data shows that many growing occupations are in survival-wage categories, while fewer support economic mobility. The city aims to partner with existing organizations to improve coordination and pathways for residents, particularly in connecting to large employers like Mayo Clinic.
Council feedback: Councilmember Fredericks noted the loss of in-person networking and the need for navigable pathways. Councilmember Keene emphasized focusing on building careers, not just entrepreneurship, and highlighted the importance of trades. Councilmember Miller requested measurable metrics similar to the transit dashboard and updates on the process timeline. Councilmember Doring expressed interest in equitable workforce outcomes across race and gender. Councilmember Wall questioned the role of survival-wage occupations in the mobility ladder.
Study Session Schedule
City Administrator reminded the council that no meeting will be held on Monday, August 31 (fifth Monday). The next study session is September 9, 2026 (Wednesday due to Labor Day), which will continue budget discussions, action plan updates, and credit card service fees. Upcoming sessions later in September will cover stormwater credit transfer policy, mode shift, and housing access.
Key Outcomes
- No formal votes were taken.
- Staff will provide a specific cost estimate for reducing the levy to 5.21% at the next study session.
- Council will discuss a potential ask for AnyPath Home initiative (approx. $100,000) at the next meeting.
- Staff will continue policy discussions on elected official communication tools and budget restructuring for the mayor/council.
- Transit staff will provide monthly KPI dashboards to council and continue planning for Link BRT and transit development plan (TDP) implementation in 2028.
- Economic mobility work will proceed with deeper stakeholder engagement and resident co-design, with an update expected later in 2026.
Note: There were no consent calendar items or public comments during this study session.
Meeting Transcript
We are going to get started with our study session for August 24th, 2026. We have three agenda items. First is uh discussion on our 2027 recommended supplemental operating budget. We've got an hour and a half uh slated for that. Then we will hear an uh Rochester public um transportation transit uh financial outlook um update and then we will have an update on economic mobility program. So with that, um administrators owns budget. Thank you, Council President, Council members. I just want to start off the um well, this isn't moving. Do I need to turn it on? Press this button. Oh just might not be clicked on that screen. Okay, I'll try. Oh, got it. A little help from the crowd. Um, so I just want to start off the 2027 recommended supplemental operating budget by thanking a large group of people who it takes to pull this together. Um, even though we're in the supplemental budget, which isn't um as much change as when we're in the two-year budget process, um, there is still a lot of work that has to happen in order to bring you the budget book, etc. So big uh thank you to Rachel Hodick, uh Josh Doerr, Eston Josted, Brian Anderson, Aaron Parish, the entire communications team who have to move back and forth and pull this together. You'll see that the presentation is ADA compliant, um, which was a feat in and of itself, and then also um to all the teammates who work hard to make sure that their base budgets are reviewed and um that we are able to be able to support what we anticipate within the recommended budget that we started creating about a year and a half ago in the two-year budget process. So with that, I'm gonna go fairly quickly through the beginning, as you have seen that before, but I think it's important framing for anyone that might be watching online that hasn't been at the prior meetings. Uh first we do try to look at this through the lens of your priorities and principles, so the strategic priorities, um, which is how we focus our resources and initiatives, and then the foundational principles, um, which is how we try to approach every action and decision and how we deliver on those things on a daily basis, whether that's operational or whether that's coming forward with projects that sometimes take five and ten years from their idea to finishing them. You see some of that outside of City Hall today. Um, we have uh been through this process, as mentioned. We had factors influencing the budget in April, um, follow-up with the audit, which is what happened in 2025, and then again um in July, um, the budget update with additional information. Um, we have this study session on the 24th, another fourth coming on September 14th, depending on if there's more deep dive that we need based on the feedback we get today. And there are some other holds on the um the study session agenda, depending on if there's details we need to continue to work through. You do have the preliminary levy adoption on September 24th, or excuse me, September 21st. Uh, that's planned at that time you would be approving a levy that could go down or stay the same, but could not go up. So if there's something that you see here that you want to add, this is that's very important right now. Um, and then the adoption of the budget is planned for December 7th at that public hearing. Um, the supplemental process, as I mentioned, is not as rigorous as the two-year process. We don't have new a new decision package process for new ideas or expanding programming. Um the RPU budget is included in this, but as we have been mentioning over the last year and a half, there's a lot of refinement that's been happening with changes there. Um General Manager McCullough will present that part of the slides. Um, but we do have a lot more detail in this um 2027 recommended uh than we've had in the past because we've wrapped up all of the work that many other people do in order to bring this to you. So we're really looking for, and it's important, we've talked about this before is getting any feedback on changes, adjustments, either reductions, increases, reductions to make other uh introductions of new ideas, and whether that 5.59% increase, which is not the tax levy rate. We'll talk a little bit more about that later. That's the percent increase year over year that would be required to fund the things that are in the recommended budget that are levy funded. Um again, we've talked about the LGA before. We heard from you back at the last study session that that needs to be a significant discussion in the 2028-2029 budget process about pavement preservation, um, both roads and trails. Um, so that will probably consume much of your time in 2027 early on. Uh, and um again, we haven't been keeping up with the local government aid and the hold harmless fell off in this 2027 budget year. So um to get down to the details of the budget, um, what we have here for all funds combined, and of course, we we would expect some of this to change with Rochester Public Utilities is a 799.3 million dollar budget. The vast majority of that is not funded by the tax levy, although we talk about the tax levy significantly, it's important to people who own property here. Um, the uh total increase is that that makes up is about 6.6 million dollars in tax levy adjustment. Um, the rate increases for sewer and wastewater or excuse me for sewer are still trending at 1% based on the rate study, and they will be updating their rate study for the 2028-2029 budget year for electric. The original recommendation was 6%, but the recommendation that came through the RPU board is at 4%, which will affect the average customer by about $5 a month. And water has not changed since the original recommended two-year budget, that is about 9%, and a change on average of $1.78 a month. Again, cost of service studies are going to be forthcoming for Rochester public utilities for both water and electric, and then also for sewer, as I mentioned. So those are things that are very similar to what you saw in the two-year budget process. Um, you can see how that rolls up on the right-hand side of the screen.
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