It’s all about the money
Preliminary planning for FY2025 budgeting
Well here I am, with a little more than two months on the job as your City Administrator. I consider a big part of my role as listening and observing- especially in the first few months on the job.
This leads to another significant part of my role- proposing changes to how we operate as a City. More times than not, that involves money and budget coordination. It is somewhat convenient that after just a few months on the job, we will be beginning the FY2025 budgeting process. That means I am busy both learning about our City and preparing for the most important task of the year- and I am enjoying it. The City’s fiscal year runs from July 1 to June 30 each year. And the fiscal year number (FY) is the following calendar year number. So starting on July 1, 2024, we will enter FY2025. I felt it would be helpful to share with you some of the items that I am focusing on as we prepare for the budgeting season.
Local Option Sales Tax (LOST) — A key component is the local option sales tax. The majority of the revenues are used to pay for debt payments that would otherwise be added to property taxes. We commonly refer to this as property tax relief. Without this sales tax, our property taxes would significantly increase. A smaller portion also helps us maintain city services and fills budget gaps. Some is also maintained for unforeseen needs throughout the fiscal year. Next year citizens will have the opportunity to vote to renew the local option sales tax that is otherwise set to expire in 2025.
HF718 — During the last state legislative session a significant property tax reform bill was passed known as HF718. The bill has 14 different divisions which has made it somewhat difficult to understand. This week City staff attended a seminar to learn more about the impacts. While the goal was to provide property tax relief, there could also be significant, negative impact to city budgets. For Marshalltown, we will lose some special levies that had provided additional services at the library, supported general government services, and some quality of life initiatives. This new law will be a learning process as we budget for FY2025.
Capital Improvement Plan — Staff will also be updating the Capital Improvement Plan (CIP) that will be one of the first budget items the Council will review in the budget process in January. I hear a lot from citizens who want to make sure the City’s infrastructure is maintained and the CIP is part of that process. We hear you and will face this challenge each year.
Current Debt — As I mentioned above, our current debt obligations are paid using a combination of sales tax and property tax. Maintaining that balance is very important to every individual tax payer. As we look forward, keeping that balance and making improvements while maintaining responsible debt levels is something to always keep an eye on.
Street Maintenance Program — This last one is something I want to work with staff and Council on to see what we can do to improve residential streets throughout the City. Spoiler alert: We do not have the funds with current resources to make the impact as fast as we would all want. And we might not have a large scale plan in place by FY2025.
But with that said, this is an area that I am committed to taking a hard look at. I have faced this challenge in other cities and with lots of tough choices, and some sleepless nights, we were able to hammer out a plan. Please know we hear you and this will be a significant topic in the FY2025 budget.
As you can see from just a small insight, the budget process is a big challenge every year. FY2025 will pose some new challenges as well. But I assure you the staff is knowledgeable, and committed to bringing forth a responsible budget proposal to the City Council for approval in April 2024.
Joe Gaa is the Marshalltown city administrator.