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Marion projects future shortfalls as levy limits cut city's growth,"model projects negative cash flow"
Summary
City staff updated a five-year financial model using FY24 audited and FY25 actuals and told council levy limits tied to taxable valuation growth will reduce tax revenue growth; the general fund is projected to drop below reserve requirements by fiscal year 2029, prompting near-term budget tools and legislative outreach.
Marion City staff presented an updated five-year financial plan at the Aug. 5 work session that shows the city's general fund under pressure from state levy limits and rising costs. Leanne, a finance staff member, said the model uses FY24 audited numbers and FY25 actuals and includes assumptions of 5% taxable growth in reassessment years and 3.5% in other years, with 5% expense growth across functions and 7% for public safety.
"The model projects negative cash flow in future years," Leanne told the council, and she highlighted that, under current assumptions, the general fund balance is projected to fall below the reserve requirement by fiscal year 2029. She also said unanticipated interest revenue and vacancies temporarily boosted reserves for FY25'FY26, delaying the shortfall by about a year.
Staff illustrated how recently passed state measures would limit levy increases tied to valuation growth (they referenced House File 718 and a Senate study bill) and explained the mechanics: for example, taxable growth of 3% can produce a 1% levy limit, and higher valuation growth can compress the net change in revenue.
Councilmembers pressed staff on what actions are available. Leanne said the city is continuing 0-based budgeting, reviewing fines and fees (including planning fees) so property taxes are not subsidizing other services, and evaluating whether vacant positions should be refilled. She also said cost-allocation adjustments and shared-services reviews for internal departments and public works will be used to contain costs.
Councilmember (Speaker 3) asked when the modeling would be shared with state legislators ahead of the next session. Ryan (city staff) said the city's lobbyist is in regular contact with key legislators and that the city has shared its information with Representative Kaufman and other officials.
What happens next: staff will present more detailed FY26 information at upcoming council meetings and continue to refine assumptions. Council discussion signaled interest in both short-term budget adjustments and in coordinating with peer cities and legislators to address the levy limit implications.
Why it matters: Marion's five-year projection is intended to guide budget choices and capital planning, but the model indicates the city will need a mix of cost containment and policy responses if current assumptions hold.
