With the start of a new year, budget talks are shifting into high gear for local governments across the state, and the Marshalltown city council spent nearly a half hour discussing property tax valuations and potential reductions at the tail end of Monday night’s meeting — with the controversial franchise fee being proposed as a potential remedy and set to be considered further during an upcoming special meeting on Monday night.

City Finance Director Diana Steiner kicked off the conversation by sharing numbers on assessed property tax valuations for the upcoming fiscal year compared to the current one. Residential valuations increased by $176 million primarily due to the Glenwood addition, and agricultural land values also increased. Industrial valuations decreased after JBS and Lennox both successfully appealed their valuations and had them reduced slightly. Overall, the increase in valuation is about 8.5 percent.

She then shared a breakdown of how the assessed value becomes the taxable value with the current rollback and various exemptions available in Iowa. The taxable valuations for residential properties within Marshalltown went up by about 6.85 percent, and agriculture also increased. With all of the factors considered, the city can collect approximately $8,953,942 million in general fund revenue, an increase of $227,828, which Steiner said isn’t even enough to cover increases in police department spending and wages. As the conversation shifted to the general fund, City Administrator Carol Webb told the council she would like their focus to be on how to address a shortfall, and Councilor Marco Yepez-Gomez asked Webb and Steiner about how long the rollback has been in place.

Webb noted that Steiner had presented 22 “assumptions” in her memo regarding the budget and wondered if the council wanted to hear all of them. She explained that due to council direction, the hiring of a city communications director, rental and housing inspector, building inspector and a building official had been budgeted.

The Marshalltown Police and Community Team (MPACT) program is currently funded with American Rescue Plan Act (ARPA) funds through December of 2026, and the police department is researching funding streams to continue it after that. During the public comment period, Leigh Bauder called MPACT an “absolutely necessary” program for the community and hoped it would continue to be funded as a partnership between the MPD and YSS, and she would also like to see a Request for Proposals (RFP) sent out for employee benefits.

Before any Local Option Sales Tax (LOST) funds are transferred into the general fund, Steiner said, it is currently short $1.6 million. For the current fiscal year, the council approved transferring $1,076,000 from LOST into the general fund, and the year before, they only needed $304,000. Webb described the current gap as “not sustainable” and said it would hamper the council’s priorities going forward.

Recalling last year’s discussions on proposed cuts, Webb didn’t feel they went particularly well and opted to ask broader questions of the council this time around to assess methods for balancing the budgets. Webb didn’t recommend dipping into reserves as the city isn’t meeting its targets at the moment and also didn’t believe adjusting fees would make a major impact.

Another option, she said, would be taking a second look at adopting a utility franchise fee after a five percent proposal in 2023 garnered a petition for a special election and failed by a wide margin at the polls that year. Mayor Mike Ladehoff asked individual councilors to go down the line and choose which reductions or adjustments they might favor, and in response to a question from Councilor Melisa Fonseca, Webb said they could either make smaller cuts across the board or simply eliminate a program or service as opposed to “nickel and diming” it. Fonseca indicated that she would favor a percentage cut across the board.

Councilor Greg Nichols felt the lens should be expanded to explore cuts, utilizing LOST and potentially implementing a franchise fee. Councilor Jeff Schneider recommended not using reserves and not relying on a fee and charge review as he didn’t feel it would happen in time for this budget season and eat up too much staff time.

Ideas like adjusting non-union employee pay increases and not filling some positions that are currently vacant were also floated, but Councilor Sue Cahill said that any budget balancing on the backs of city employees caused her “a whole lot of pain.”

“I think we have good people. I think we need to pay them appropriately — again, deferring some purchases if necessary, if we can get by on that, but again, that’s a Band-Aid. That’s a stopgap. We know that,” she said. “Wages and maybe vacancy management, we can look at, but I think we have obligations to our employees to keep good employees here, and I think that is what I want to keep doing.”

Councilor Gary Thompson simply commented “ditto” to Cahill’s remarks, and Yepez-Gomez told the council he would be “a strong supporter” of revisiting the franchise fee as every one percent could generate about $500,000 in revenue. He didn’t wish to explore any cuts before that option was further explored.

Thompson didn’t feel that delaying non-essential purchases or initiatives would make much of an impact, and Yepez-Gomez reiterated his position that he didn’t want to consider any expenditure reductions before the franchise fee was discussed further. Webb then briefly explained the process for enacting a franchise fee whether through council action or an election, but she warned that it wouldn’t be implemented in time to fill any gaps in the current budget.

“So I think this year you’re looking at either cutting something or filling the entire gap with Local Option Sales Tax,” Webb said.

Although Fonseca asked about making a motion to explore the franchise fee further, Webb said she could do that without any official action, and none was taken.

The special meeting is set for Monday at council chambers beginning at 5:30 p.m. The only two discussion items on the agenda are 1) expenditure reductions and revenue increases to balance the general fund budget and 2) utility franchise fee.

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Contact Robert Maharry at 641-753-6611 ext. 255 or

rmaharry@timesrepublican.com.