T-R PHOTO BY ROBERT MAHARRY — City of Marshalltown Finance Director Diana Steiner addresses the city council about the overall levy rate during Monday night’s meeting. The council ultimately voted 5-2 to raise the figure from the current $16 per $1,000 of valuation to $16.25.

Two weeks after voting to increase the city’s transit levy rate by $0.25 per $1,000 of valuation, the Marshalltown city council tentatively agreed to increase the overall rate by the same amount from the current $16 to $16.25.

Finance Director Diana Steiner started the budget discussions by reviewing the city’s debt service fund, long-term debt schedule, employee benefits levy and municipal police and fire levy before shifting to the overall tax rate for Fiscal Year 2027, which begins on July 1. She noted a 3.64 percent growth in taxable valuations, which based on state law, requires the city to drop it down a percentage point to 2.61 percent. Overall, the increase is from $8.7 to $8.9 million, not enough to cover obligations in the general fund.

Although Public Works Director Heather Thomas did not recommend such a move, the council voted to raise the transit levy from $0.40 to $0.65 per $1,000 of valuation at the last meeting, and Steiner said she also increased the liability, property and self-insurance costs by 10 percent despite not yet knowing what the premium will be.

There are also special revenue levies like the police and fire retirement, Federal Insurance Contribution Act (FICA) and the Iowa Public Employee Retirement System (IPERS), debt service and capital projects. To keep the rate at $16.25, City Administrator Carol Webb said staff is proposing to draw down the employee benefits fund by about $1 million, and if the council wanted to keep it at $16 flat, an additional $268,000 could be drawn from the employee benefits fund or the police/fire retirement fund with staff preferring to utilize the police/fire retirement fund.

In response to a question from Councilor Melisa Fonseca, Steiner said the city’s health insurance fund had gotten so low in FYs 2024 and 2025 that the state notified officials of a need to raise it, and Fonseca also referenced Iowa’s increasing cancer rates as a reason to keep plenty of money in the fund.

In explaining the practical implications of a levy increase, Steiner shared some numbers for a house valued at $100,000 and added that a tentative rate needed to be set at the next meeting so it can be published and a hearing scheduled. Councilor Gary Thompson preferred to keep the overall levy rate at $16 but asked Webb how comfortable she and Steiner felt drawing down from the police and fire retirement fund.

Webb replied that they would ultimately feel fine drawing down the fund, and Councilor Sue Cahill wondered if the council could explore a “middle of the road” rate like $16.10 or $16.15 per $1,000. The city could ultimately raise the rate in increments as small as one cent, and Steiner noted that once the rate is published and a hearing set, the city cannot go above the rate it sets but can go lower.

“I’m just trying to keep us on an even keel rather than an up and down rollercoaster of going down this year, and then people get used to the lower level or going up beyond what we definitely need, coming in halfway so that their taxes are similar to what they’ve paid in the past,” Cahill said.

Thompson reminded the audience that the city is not the only taxing entity and reiterated his hope of keeping the rate at $16. Councilor Jeff Schneider worried about drawing the fund balances down too low and instead recommended setting the rate at $16.25, making a motion to proceed with such a course of action.

Before the vote, Thompson asked Steiner where additional money for insurance would come from if the increase is more than 10 percent, and she said it’s all in the general fund.

“So I may be back,” she said.

“So in other words, it’s LOST,” Thompson quipped.

A vote to set the rate at $16.25 passed by a 5-2 vote with Thompson and Cahill opposed.

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Contact Robert Maharry at 641-753-6611 ext. 255 or rmaharry@timesrepublican.com.