Council confronts $1.6 million general fund gap; asks staff to return options and explore franchise fee

City finance staff told the council Marshalltown faces an estimated recurring general-fund shortfall of about $1.6 million for FY27 after updated county property tax valuations and rollback calculations.

Finance Director Diana Steiner described valuation changes (residential valuations rose significantly, offset partially by rollback percentages and commercial appeals) and outlined budget assumptions including negotiated police wage increases, added positions and a 10% estimated rise in property and liability insurance. "So what this boils down to is ... we are short $1.6 million," Steiner said, walking council through revenue and levy mechanics.

City Administrator Carol (staff) presented options to close the gap: program or service-level adjustments, vacancy management, deferred purchases, a limited use of reserves (not preferred), or pursuing a utility franchise fee (which would require an ordinance and potentially a public election and would take months to implement). Carol explained the franchise fee is not a short-term fix because the implementation timeline can exceed six months and could require referenda if petitioned.

Council asked staff to return with recommended program and service reductions and a timeline for further evaluation of a franchise fee and other revenue options. Several council members said they did not want to cut employee wages but supported vacancy management and targeted program reductions. Council asked staff to bring back proposals quickly for a special meeting to review special revenue funds and potential cuts.

Next steps: staff will prepare program/service reduction scenarios, vacancy-management options, and a franchise-fee briefing for council consideration at a follow-up meeting.