FM City Council gets first look at next budget

Fort Madison City Council members listen to a budget presentation from City Manager David Varley, far right, Tuesday in Fort Madison. Photo by Chuck Vandenberg/PCC


FORT MADISON – Fort Madison residents could see a drop in their property tax levy, according to a preliminary budget presented Tuesday by City Manager David Varley.

The budget carries a city property tax, or mil, levy of $15.07 which is down 29.1 cents/$1,000 of assessed valuation. It’s the fifth year in a row the city’s budget formula has resulted in a lower tax rate.

However, county valuations have gone up in the past year, so overall property tax bills could still be higher based on the increased valuation of each property.

The general levy tax rate is still at the state maximum of $8.10/$1,000 assessed value. The city’s debt service levy will drop slightly to $1.63/$1,000, down about 8 cents. The other city funds that make up the levy include:

• Local emergency management levy – 1.8 cents/$1,000
• Employee benefits levy – $4.81/$1,000
• Emergency tax levy – 27 cents/$1,000
• Aviation Authority (no levy was provided as Varley indicated no budget has yet been submitted by the Airport Commission)
• Tort liability levy – 25 cents/$1,000

Varley told the council the biggest thing facing the city’s finances is how to maintain services that are paid from the General Fund.

“Revenue has dipped below expenditures and this looks to continue into the future unless some significant changes are made,” he wrote in his budget report.

“Also, our reserve has dropped to an unacceptable level of around 0% and that puts us in a precarious situation.”

Councilman Mark Lair asked Varley what solutions he had come up with to solve some of the problems, and Varley referred back to the franchise fee on gas and electric users in the city.

Varley presented options to the council in 2019 that included a 2 and 3% franchise fee. Iowa law caps the franchise tax at 5%. But if cities are currently collecting the 1-cent local option sales tax, that would no longer be collected on the utility bills in lieu of the franchise tax. State law prohibits collecting both from utility users.

A 2% franchise fee would generate a net $479,000 per year. A 3% tax would net the city $759,000 annually.

Varley and city finance director Peggy Steffensmeier, are projecting total general fund revenues for 2020-21 to come in at $5.93 million, while expenses total $6.12 million.

City officials are planning on closing out a $6 million quality of life bond that has been used to improve streets, playgrounds, and parks. There is about $100,000 left in the fund and that will be used to find a solution for the Victory Park tennis courts and to make needed repairs at the city’s pool.

The city’s hotel/motel tax is expected to see a decrease. Revised numbers for 2019-20 show revenues at $230,120, with next year’s projections at $209,300. Hotel/Motel tax revenues are used for programs, facilities, and salaries of tourism-oriented functions and for approved donations to events in the city limits.

Other issues that cropped up during the workshop included keeping a full time investigator on the police department staff and possibly holding off on some bridge repairs to keep money flowing into street repair.

Councilwoman Rebecca Bowker asked for additional time to look and said she would like to see numbers on different proposals.

“I need some more numbers and we need to work on projections, and we need to see the proposed revenue,” Bowker said.

“We want to do the investigator, and pave more streets, and we want to do all these things, which are great things, but where is this money coming from? We need some more spreadsheets and need more data in order to look at that revenue.”

She said to have good numbers and not stress out staff the council needs more time.

Mohrfeld said he was after a quality budget and not rushing through the process.

Another budget workshop was set to follow the Feb. 4th regular council meeting.

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