City Manager says city can’t afford LCEDG request

BY CHUCK VANDENBERG
PCC EDITOR

FORT MADISON – Fort Madison City Manager David Varley wrote a memo this week to the Fort Madison City Council advising that a current funding request from Lee County Economic Development Group last month doesn’t seem to be a responsible request.

In the memo, issued as part of the information City Councilors have prior to regular meetings, Varley said funding at the level requested by the LCEDG would be tough for the city to absorb.

At an August meeting in front of the council, LCEDG CEO Joe Steil made the request for funding at a rate of $50,000 per year for the next five years. In 2014 the city made a commitment to the group for the same amount of money, but scaled that back in 2017 to $25,000 due to a loss of about $300,000 in revenues from Catfish Bend Casino that the city no longer receives. The current budget year does not have a contribution allocated due to revenue shortfalls, which would leave the city’s commitment to LCEDG one year short.

At the same August meeting, Steil asked the city to continue its contribution of $50,000 for another five years through 2023, but said he understood that cities have to operate within their budgets and these types of contributions have to be measured on an annual basis.

Varley said the city should honor its commitment but at a rate more reflective of the city’s current financial status.

“It seems fair that the city should honor this request, but at a level that is more responsible to our financial condition,” Varley wrote in the memo.

According to financial data included in the memo, in addition to the loss of the $300,000 in riverboat revenues, the city was down $292,000 in revenue at the end of the 2017-18 fiscal year, and sales tax revenues were also off about $242,000 for a combined reduction in revenue of $834,000.

Varley also indicated that in the first quarter of this fiscal year, the city has seen a drop of about 14% in sales tax compared to last year.

“If this trend continues, it could be an annual loss of about $200,000, which would have to be made up by reduced spending,” Varley wrote.

He wrote if the council decides to contribute to LCEDG, depending on the amount, it may mean making reductions that could have a detrimental affect on the services the city provides to citizens.

“Contributing the same amount as when our revenue was $800,000 higher than it is now, and is still dropping, does not seem like a responsible request, or a fiscally prudent action for the City to take.”

The council will take up the action at it’s Tuesday meeting starting at 5:30 p.m. in Council Chambers.

About Chuck Vandenberg 3649 Articles
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