Indianola council hears FY26 proposed budget, directs staff on COLA, fees and Willow Crest engineering

City finance staff presented a proposed FY26 budget that trims education, some capital projects and service contracts while asking the City Council for direction on property tax levies, utility fee increases and how to allocate hotel/motel tax revenue.

"Our revenue growth was capped by the state at 2.51%. The CPI expenses for 2024 were an average of 3%. So we're not capturing the full amount of inflation," Jackie, finance staff, said as she walked council through the packet figures. She said that if the city levied the full amount recommended for liability, insurance and benefits the city would collect substantially more property-tax revenue but that the council had not levied the full amount in the past.

The presentation listed department-by-department reductions: cuts to travel and training across most departments; elimination or delay of several capital purchases and projects (including $110,000 in capital improvements in IT, a chassis replacement for a fire pumper, some pool and facility work at the IWC, and vehicle replacements in parks and sewer); and program reductions (for example, Main Street funding cut from community development and removal of RFID tagging and self-checkout at the library). Jackie warned that not levying the full insurance and benefits request "will mean the departments will need to cut their budgets further."

Why it matters

Council members framed the proposal as a response to constrained revenues and rising costs and debated tradeoffs among staff compensation, service levels and one-time projects. The packet preserved a 3% cost-of-living adjustment (COLA) in the proposed budget for most employees and a 6% increase for police employees consistent with their contract; council members broadly supported those figures during the discussion.

Council directions and formal scheduling

- Council asked staff to keep a 3% COLA for most employees and a 6% contract COLA for police (direction; consensus, no roll-call vote recorded).

- Council directed department heads to manage overtime tightly, allowing overtime when unavoidable (direction; consensus).

- Council agreed to no new full-time hires at this time except for the city manager position; council also directed that full-time vacancy backfills and promotions be brought to the council for approval (direction; consensus).

- Council members agreed to set a public hearing on the property tax notice for March 24 at 6:00 p.m. and to hold a second meeting that evening at 6:15 p.m. to set the budget adoption public hearing for April 21 at 6:00 p.m.; Jackie reminded the council that the proposed budget must be submitted to the county by March 5 and the finalized budget to the state by April 30 (formal schedule action).

Fees, utilities and bonds

Staff recommended fee increases to support requested positions and capital needs in the stormwater and sewer funds. Jackie said stormwater revenues were forecast at roughly $700,000 and that four new stormwater staff had been requested to perform utility repairs; she told council that the financial adviser recommended a 3% sewer increase in their preliminary review. Council discussed legislation at the state level that could cap sewer increases at 2% and the practical effect on local recovery of costs if such a cap were enacted.

Council members and staff explored options to smooth future increases, including a policy tying fee adjustments to the consumer price index to avoid large, infrequent jumps in rates.

Hotel/motel tax and external grants

Council and staff reviewed the city’s current hotel/motel tax allocations and discussed possible temporary reductions for a year to preserve city services and reserves. The packet listed prior-year distributions: $10,000 to the National Balloon Classic, $10,000 to Downtown Merchants, $10,000 to Warren County Fair, $8,500 to the Des Moines Metro Partnership, $8,500 to the Art Commission, $500 to the Indianola Concert Association, and larger amounts for Bravo and Catch Des Moines. Councilmembers said they would consider pausing some discretionary contributions for one year and asked staff to clarify financials for entities requesting FY26 funds.

Willow Crest engineering and TIF borrowing

Council discussed advancing Willow Crest engineering in FY26 by using a reimbursement resolution to borrow against the city’s TIF account and repay it when TIF receipts arrive. Staff estimated construction costs around $4 million and engineering/design costs roughly 9–11% of construction (an estimated $400,000–$450,000), with total potential design/easement costs possibly up to about $600,000. Council agreed it was permissible to pass a reimbursement resolution to fund engineering now and reimburse from future TIF receipts.

Service impacts called out by staff

Finance staff listed specific service impacts from cuts: reduced training and travel (affecting internal promotion and certification timelines), deferred website and IT updates (limited to federal compliance only), elimination of an HR part‑time assistant, reduced police uniform and equipment funds (affecting morale and operational replacement schedules), deferred fire equipment purchases and a canceled utility vehicle, removal of RFID security and self‑checkout at the library and removal of some parks and trail engineering. Staff cautioned the sewer department that biosolids hauling expenses would end after FY26 and that several sewer-related purchases and smoke testing/televising were removed from the FY26 budget, potentially delaying problem detection.

Quotes from council members

"I have a hard time with 3%, and I know 3 percent's lower than last year, but 3 percent's on top of step increases," Melissa, councilmember, said in the salary discussion. Josh, councilmember, said he was comfortable keeping the 3% COLA in the proposed budget.

Next steps

Jackie reminded council that the proposed budget must be filed with the county by March 5 and that a property-tax public hearing will be held March 24 at 6 p.m., with a separate April 21 hearing for budget adoption. Staff will provide clearer totals by department and additional detail on hotel/motel allocations, the financial adviser’s recommended fee changes, and the bond counsel’s guidance on reserve targets and compliance. Council members asked staff to continue work on projected fee increases and on conversations with state legislators regarding potential fee caps.

Ending

Council members and staff concluded the session noting the difficulty of the choices ahead and thanked department heads for their work on the proposed budget. The council left several policy decisions (exact stormwater/sewer rate changes and final hotel/motel allocations) to be finalized after follow-up information from staff and the financial adviser.