Newton staff asks commissioners to exceed revenue-neutral rate, commissioners signal support for 60th-percentile pay plan

City staff presented the draft 2026 budget and long-range bond projections to the Newton City Commission and asked commissioners to give early direction to exceed the county clerk's revenue-neutral rate to capture roughly $610,413 in additional property tax revenue.

The request was framed as a staff action item at the end of a presentation on the bond and interest fund, capital improvement program (CIP) and the draft budget. Donna (Finance director) asked the commission directly: "What we need from you is a consensus to exceed the revenue neutral rate so we can have that form and have you fill it out and vote on it on July 8." Rebecca (city staff) said staff also needed a clear direction on how to implement the salary study recommendation.

The revenue-neutral rate the county clerk calculated for 2026 is 68.82 mills. Staff proposed keeping the city

current combined mill levy at 72.223 and using the additional $610,413 in 2026 to fund personnel and reserve needs. Donna provided the valuation figures staff used in the estimate: a July 1, 2025 assessed valuation of $181,170,521, adjusted for TIF to about $179,000,000 (roughly $179,375 per mill).

Why it matters: exceeding the revenue-neutral rate requires the city to publish a notice and take a formal vote. Staff said the extra revenue would be used primarily for implementing a market-based salary adjustment and bolstering reserves for building and equipment replacement.

Key points from the presentation

- Staffing and salary: Rebecca said the city implementation plan follows a recent consultant report recommending placement at the 60th percentile of regional pay. "About 90 to 95% of all of our available resources are already committed," she said, noting that adopting the 60th percentile carries the largest single budget increase. Staff presented comparative cost scenarios for the 60th, 65th and 70th percentiles and said the 60th was the most fiscally sustainable across funds.

- Bonds and CIP: Donna reviewed bond and interest projections and a 10-year forecast for the GEO (bond) fund, showing several large projects (water, sewer, paving and a potential future public-safety facility) that would add debt service beginning in 2026 and later years. She noted the city has about $23 million in bonding authority available and that certain utility projects are exempt from the city

debt limit. Staff warned that larger projects or developer-driven timing changes will affect the mill levy and reserve balances.

- Reserves and capital needs: Staff proposed increases to equipment and building-maintenance reserves to address aging systems across city facilities, including HVAC replacements and roof work at the recreation center and Meridian Centre. Donna said the Meridian Centre will need substantial repairs as it approaches 15 years.

- Enterprise funds and transfers: Donna said the wastewater fund carries heavy debt and staff recommended not taking transfers from the wastewater fund in 2026. She warned that budgeting routine transfers from that fund could leave it in violation of statutory reserve targets.

- Other operating items: Staff flagged higher health-insurance costs driven by recent claims and pharmacy costs, and described work to reduce credit-card processing fees after a spike in merchant charges. Staff also reported that CVB (convention/visitor bureau) funds are being set aside to support a proposed 250th July event.

Commissioner direction and next steps

Commissioners were asked for a head nod on whether to exceed the revenue-neutral rate and where to place pay adjustments. Multiple commissioners signaled support for exceeding the revenue-neutral rate and for moving toward the consultant-recommended 60th percentile, with one commissioner saying simply, "I'm sixtieth." The commission directed staff to publish the required notice and bring a formal "not to exceed" resolution for approval at the July meeting cycle so the city can proceed with the budget timeline.

Staff outlined upcoming dates: a formal notice to exceed the revenue-neutral rate will be placed in the paper, and the commission will consider the official "not to exceed" budget later in July; staff also said they would return with additional requested analyses (including a longer look back at abated taxes and valuation trends) before final adoption.

Ending

The work session closed with standard procedural items and a short executive-session motion (see actions). Staff will proceed with the advertised notice and finalize numbers for the July decision points.