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Decorah council debates FY27 nonprofit allocations and options to repay Hively Street project
Summary
Council reviewed FY27 draft budget line items for nonprofit allocations and considered four debt-repayment options for the 2026 Hively Street Improvements project that trade off enterprise fund use and property-tax (debt service) levies; staff recommended a middle approach that uses a debt service levy with a modest employee-benefits levy reduction.
The Decorah City Council discussed the draft FY27 budget at length, focusing on how to treat nonprofit allocations and how to repay the debt for the 2026 Hively Street Improvements project.
On nonprofit allocations, staff said the draft budget includes previously funded requests and noted new requests—Decorah Genealogy Association (not funded last year) and a $5,000 request from the Winne-something County United Way (first-time request). Councilors emphasized the legal requirement to identify a public purpose before awarding city funds to nonprofits; as staff put it, "Article 3, section 31 of the Iowa Constitution says you cannot use public funds for a private purpose." Council suggested asking the senior center for a specific project-based proposal (for example, window replacement) before committing funds.
On the Hively Street repayment, staff outlined four options: (1) use the debt service levy for the project, (2) use enterprise funds and other revenues (no debt service levy), (3–4) hybrid options that allocate some costs to enterprise funds while deploying a reduced debt service levy and lowering the employee benefits levy by specified amounts (staff modeled a middle option that reduces employee benefits levy by roughly $274,000). Council members split on principles: some argued enterprise ratepayers should pay enterprise costs (water, sewer, storm), others favored debt service to avoid raising utility rates. Staff noted the city has debt capacity and presented tax-levy worksheets showing the relative levy impacts; staff said further refinement and another checkpoint would be scheduled to finalize the approach.
No final binding decision was reached at this meeting on which repayment path to submit to the state; council sought additional modeling (assuming a middle $274,000 drawdown of employee benefits levy) and preferred to wait for all members to be present for a final vote.
