Keokuk city administrator warns of roughly $2 million general‑fund shortfall; proposes fee increases, borrowing and cuts

Jim, the city administrator, told the Keokuk City council that Keokuk faces a roughly $2,000,000 general‑fund shortfall and outlined a mix of revenue and spending options to narrow the gap.

"If I were to just put [department requests] into the general fund the way it was requested, it was a $2,100,000 deficit," Jim said, adding that the city entered the year with about $4,000,000 in reserves and would exhaust those reserves absent policy changes. He emphasized the goal of stabilizing long‑term levy and debt service levels rather than repeatedly shifting obligations.

Why it matters: the presentation framed the budget challenge as structural. Jim identified several primary drivers — slow taxable valuation growth, a decline in population and customers (he cited a decline from a 1960 peak of about 16,000 to roughly 9,400 today), conversion of sewer revenue debt into the city’s overall debt picture after the loss of a major employer, and reductions in outside revenues such as regional gaming distributions.

Gaming and grant changes have tightened revenues. Jim said the city received about $470,000 from the regional gaming distribution in 2022 but has been weaned down to half, then a quarter, and that the allocation will go to zero in the next budget year. "Over the course of about 4 or 5 years, we went from around that peak of about $470,000 revenue ... to nothing next year," he said.

Options presented: Jim described a menu of choices to close the gap. He said raising the local franchise fee to the maximum allowed by state law — from the current 3% electric / 2% gas structure to 5% — could yield about $800,000 annually. He also highlighted an existing industrial rebate program that costs the city roughly $200,000 per year and said eliminating or reducing that rebate would raise additional revenue.

On reclassifying and accurate accounting: Jim pointed out prior budget entries that overstated revenue and understated costs — for example, projects shown with large grant receipts that did not match project timing — and recalculated that a trail project budgeted at about $1.3 million would likely net roughly $350,000 to the city after grants and donations. He said some previously reported surpluses reflected timing and accounting choices rather than recurring operating capacity.

Short‑term borrowing and expense reallocation: for immediate capital needs Jim proposed short‑term borrowing of about $1,000,000 to repair the police department roof, address a generator and boiler issue and to pay for urgent building repairs within the same fiscal year. He said he planned to present options to use local option sales tax and to reclassify certain capital and equipment purchases out of the general fund where legally allowed.

Service and staffing questions: Jim cautioned that the remaining gap after revenue changes could require cuts that would be unpopular. He said public safety costs are high relative to peers (he cited Keokuk spending about $7.1 million for public safety versus a peer average of about $4.2 million) and that some long‑term structural options — for example, revisiting staffing mixes or repurposing facilities — require time and planning.

Next steps: council members will hear departmental budget presentations at three scheduled budget meetings; Jim said he will return in the coming weeks with a set of specific options and scenarios. The meeting concluded after a motion to adjourn was moved and seconded (the transcript does not record the formal vote).