T-R PHOTO BY ROBERT MAHARRY — Finance Director Diana Steiner, left, addresses the Marshalltown City Council about the Fiscal Year 2026 budget during Monday night’s regular meeting.

For about the last half hour of Monday night’s regular meeting, the Marshalltown city council and Finance Director Diana Steiner dove further into the Fiscal Year 2026 budget with a focus on the property tax levies.

After providing some background on valuations and how the numbers are formulated, Steiner said the maximum amount the city can collect for general fund levies is $8.41 per $1,000 of valuation, an increase of $161,000 over FY25, which she described as a small amount that wouldn’t even cover cost of living adjustments. Steiner then ran through other line items and arrived at the overall levy rate of $16 per $1,000, which is the same as it has been during the current fiscal year.

As required by Iowa law, there is also a column showing what the rate would be with valuations going up and the amount of requested dollars staying the same, which in Marshalltown would be $14.84 per $1,000.

“That’s not really realistic since everything’s going up (in cost), so we are proposing that the rate stay at $16 with the amounts I went over with you earlier,” Steiner said.

She also broke down how overall tax bills would be affected by changes in valuation. With no further questions or public comments, Steiner moved on to special revenues such as employee benefits (FICA tax, IPERS, health insurance, worker’s compensation and health savings accounts) and police and fire retirement. To keep the levy rate at $16, $3.9 million will be transferred into the general fund to cover the employer’s share of those expenses, and the levy amount will be reduced by $1.4 million.

Councilor Greg Nichols asked Steiner about how the monies were restricted and which employees they could be applied to, and she said they could only go to those paid out of the general fund. She added that the balance being kept to roll over helps the levy stay the same “so people know what to expect.”

Additionally, Councilor Jeff Schneider wondered what would happen if the city had “a bad year” with claims and if the levy would need to be raised as a result. She responded that she would come back to the council and ask for authority to move money from the employee benefits fund to the health insurance fund.

City Administrator Carol Webb said they were trying to avoid overtaxing while keeping an adequate amount in the fund to cover unexpected claims. During the public comment period, Dave Grieve asked about whether the city and state were up to date on funding the Iowa Public Employees Retirement System (IPERS), which he initially mistakenly referred to as KPERS due to his former residence in Kansas, and Steiner responded that the state operates the fund and it is not self-insured by the city — though she could confirm payments are up to date.

Councilor Gary Thompson sought clarification on whether Steiner had said she couldn’t lower the levy because the balance of the reserve funds serves as a safeguard.

“If this council said ‘We need to raise something else within the levy, the total levy, and we still want to keep it at $16,’ you’re the finance director. Something’s gotta give, so where does it give?” he asked. “Going back to what Councilman Nichols said, this looks like a pretty good fund to pull from. So what am I missing?”

Steiner said the transit levy could increase by $100,000, for example, as long as it was offset with a reduction somewhere else such as the employee benefits fund. Webb didn’t feel there was a magic number as the balance of the fund will be cut in half already, but she wanted to keep it at a level of at least $1 million.

“But that’s what I’m trying to get at. You’re saying it’s where we need it to be, but now you’re saying ‘Oh, we can pull $100,000 out of it.’ So what can we really pull out of it where you guys can sleep at night? That’s the question I’m trying to ask. You’re saying different things. It’s where it needs to be, but you can still pull $100,000 out of it,” Thompson said.

The councilor then returned to a concern he has vocalized previously, that Local Option Sales Tax (LOST) may not always be there to “bail out” the budget, and other mechanisms may need to be explored in the future. The discussion then shifted to the city’s debt schedule with a list of all of the general obligation and sewer and revenue debts, the principal amount due for payment in FY26 and the bond fee.

Schneider asked why the total outstanding principal debt wasn’t shown, and Steiner replied that it wasn’t required on the state forms she completes. In a subsequent email, she said the outstanding principal balance is $71,175,000 that will be paid from FY26 through FY43.

Thompson wondered if the city was in a position of needing to reallocate money borrowed years ago to pay down the debt before posing his question more directly.

“Are we in trouble? I think we’re in trouble,” he said.

Steiner said the city would be limited in how much it could levy for the consolidated general fund until it is pared down to $8.10, but the other levies are all based on valuations.

“So whatever I need for debt service, I can levy. Now, if I don’t get $4.2 million in Local Option Sales Tax, I may not be able to offset that $3 million. With the new tariffs, I don’t know the reaction of the citizens if they’re gonna continue to buy or slow down on buying. There’s lots of variables,” she said.

Councilor Mike Ladehoff asked if money borrowed through GO bonds always went to specific projects, and she said a list of projects to fund is always brought before the council.

“So there’s not money that we’ve borrowed just sitting around, correct? It is for future projects,” he said.

“Not really. I mean, there’s interest that we’re gaining, but depending on which bonds they are, we’re needing to pay some back to the IRS,” she replied.

Next, Public Works Director Heather Thomas stepped forward and resumed a previous discussion on the transit levy, currently set at $0.40 per $1,000, with some projections based on various rates as the council requested at a prior meeting. She said she has not received any updates from the state or federal government in relation to agreements that have not been signed or funding from the Federal Transit Authority (FTA).

As she had before, Thomas recommended keeping the levy at $0.40, but Thompson recommended increasing it to $0.60 in case a bus “goes away.” Thomas said they sometimes buy used buses from CyRide at Iowa State University, but a brand new bus would cost between $600,000 and $700,000 and is usually only an option when the city qualifies for an 85 percent federal grant.

“If that goes off the table, I think the city would be looking at other opportunities and not looking at a brand new $600 to $700,000 bus. I mean, we would be looking at probably used 30 to 40 foot buses. I know there are some municipalities that have gone to an electric fleet, so they’ve gotta have old buses out there that they have to get rid of,” Thomas said. “But those would be things we would be exploring at that time. I would not be looking to purchase a $600 to $700,000 bus with no grant funds.”

With the $8.10 general fund cap looming as required by a new state law, Thompson said he would rather be proactive than reactive and reiterated his preference for a $0.60 levy.

“The $8.10 cap has nothing to do with the (transit) levy,” Steiner said.

“I understand, but it has everything to do with the total tax rate that we’re taxing people. In my position, it’s the $16 that’s the magic number,” Thompson responded.

Steiner said the city could go as high as $0.95 on transit, but Nichols commented that the total levy would in all likelihood then go over $16 unless larger cuts were made elsewhere. Ladehoff asked Thomas to give more insight as to why she preferred staying at the $0.40 rate.

“When we talk to other municipalities that are in the small and urban transit environment that we are, I feel right now that we’re in a better position than many of them. If something happens with the federal funds that they don’t come through, there is going to be massive restructuring through Iowa DOT and other transit authorities,” she said. “I know there are other communities right now who are not able to even handle this fiscal year, and the delay in the federal transit funds from this year, and they’re looking at interim financing options and other options. We’re good, based on these projections, we’re good next year, so I don’t want to have any type of an overreaction at this point.”

If something happens in the future, she added, she feels the city still has ample time to adjust. As the conversation on that item wrapped up, Steiner asked for consensus on keeping the overall rate at $16, which she received with a lack of comments from anyone requesting changes. The final discussion of the night pertained to the second draft of the Capital Improvement Plan, and Thompson initially described it as little more than a “wishlist” before revising his comment to call it a necessity list that needs to be addressed.

“I just think there’s too many unknowns right now to make a commitment on,” he said. “It doesn’t do any harm to leave everything out there is what I’m trying to say.”

Webb replied that the CIP is intended for planning purposes based on the information currently available, and Ladehoff highlighted some of the major road repair and reconstruction projects including Main Street from 5th Avenue east to 12th Avenue and Highland Acres Road between Lincoln Way and West Main Street.

“That’s really important. I know it’s been on our radar for over three years, and Road Use Tax will pay for the engineering of getting that done,” he said. “We’ve held it off for long enough, and I think that road (Highland Acres) really needs to be done.”

Webb told the council the city does not currently have an in-house engineer on staff, and Thomas is working on a Request for Quotation (RFQ) for those services on the aforementioned major road projects, the Linn Creek Center Street bridge south of the railroad viaduct, a box culvert near Franklin Elementary, a sidewalk project near Hoglan Elementary School and a storm sewer outlet on State Street. A traffic intersection signal at the Highway 30/Highway 14 intersection is also being considered for the eastbound ramps, but a final determination has not been made.

“That sounds really good,” Ladehoff said.

According to the CIP draft attached to the council packet, the East Main Street project is estimated to cost $4 million, while Highland Acres is projected at over $5.5 million with $4.438 million coming from a RISE grant. A full list of the projects listed can be viewed at https://www.marshalltown-ia.gov/AgendaCenter/ViewFile/Item/9278?fileID=21965.

Before the meeting adjourned, Nichols wished to offer a comment on the overall budget situation and LOST.

“Basically what I’m seeing is we’re spending way more revenue than we’re bringing in this year out of our council designated (LOST dollars). And I am concerned long term that when this is completely depleted, how we are going to support our general obligation or basically our operating funds when we don’t have enough here to support that,” he said.

Webb called it “a fair concern,” and Steiner said the general fund discussion would resume at the next meeting with plans to include LOST in that conversation.

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

rmaharry@timesrepublican.com.