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  1. NIT Publisher

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    January 26, 2021 at 3:19 pm

    2nd Floor City Hall 1-21-21
    Mason City, Iowa 6:00 P.M.


    The City Council of the City of Mason City, Iowa, met in Worksession pursuant to law and rules of said Council, in the 2nd Floor Conference Room of City Hall at 6:00 P.M., on January 21, 2021. The meeting was held via Zoom and called to order by the Mayor and on roll being called, there were present, Mayor Schickel in the Chair and the following Council Members: Masson, Jaszewski, Thoma, Symonds, Lee, Adams. Absent: None.

    Burnett introduced the budget stating the goal was to try and have awareness of the environment we were currently in and North Iowa had been fortunate that the economy was fairly stable, noting the budget being presented kept that in mind as well as the tax burden to the citizens while still being a responsible budget.

    1. Final Capital Improvements Budget: Jacobson went through each fund and asked for comments or questions which were noted. At the conclusion of the CIP budget Jacobson listed the following. increases:

    $0.29 water increase
    $0.47 sewer
    $0.35 sanitation

    1. Preliminary Operating Budget Memo: Finance Director: Attached is the information for the proposed operating budget for FY 2022. The tax levy for FY 2021 is at $14.38701/$1000 valuation and this proposed budget has a tax levy at $14.02649/$1000 valuation. Discussion will take place on January 21, 2021 on a Zoom meeting at 6:00 p.m. Managers prepared and turned in their operating requests for FY 2022 based on current service levels. These requests were incorporated into the preliminary documents for discussion. The budget continues to have challenges to balance, including incorporation of the salary study, a 4.5% increase in the cost of health insurance and increases in utility and software maintenance costs. Overall taxable valuation went up approximately $29,000,000 helping relieve some of the stress to balance this budget with virtually no increase in taxes while keeping services at the same level. The State mandated rollback went up from 55.007% for FY 21 to 56.409% for FY 22. The majority of the FY 2022 budget increase was due to wage and health insurance increases, utility costs and additional software maintenance fees for support. This budget includes an average 2.75% increase in wages for Non-Bargaining, Police, Fire and AFSCME as well as continuing to implement the salary study. There also is a 4.5% increase in health insurance with the employee percentage of cost going from 16% this year to 17% for FY 22. The following sheets include various types of data for the operating budget discussion.

    Page 1-3 – These sheets show the current (FY 2021) and proposed (FY 2022) operating budgets and increase or decrease for the General Fund tax supported funds. To the far right is an explanation of the increase or decrease for each area. **Note-these sheets do not include capital projects budgeted in their respective line items yet.**

    Page 4 – This sheet shows the entire City operating budget. Included in this budget is reserve use from General of approximately $92,000 and Debt Service for $90,000. Both funds have ample reserves and the use of reserves will still leave a substantial level of reserve balances. The use of $182,000 in reserves drops the tax levy approximately $0.15/$1000.

    The General Fund has a deficit of $91,630. The unrestricted fund balance for General is $5,531,000 based on the June 30, 2020 CAFR. We have increased the fund balance with additional LOST and CARES Act money collected this fiscal year. The Fund Balance Policy will be increased to $5 million for FY 22.

    The General Projects Fund will have a balanced budget when capital projects are budgeted.

    The Downtown Reinvestment fund will have a surplus to be used in FY 23 for RCR debt repayment.

    The Southside Gateway collections will offset the current deficit in that fund. It is anticipated that fund will be back to a positive fund balance in either FY 23 or FY 24.

    Staff proposes to use the commercial rollback of approximately $120,000 in Debt Service from FY 22 to help lower the Debt Service Levy.

    The Parking Lot has a deficit cash balance for FY 21. We will be transferring $80,000 of General Fund reserves to start to bring this back in line during FY 22.

    The RCR Arena has a deficit cash balance for FY 21. We will be transferring at least $50,000 of General Fund reserves to offset any revenue shortfalls during FY 22.

    The balances left from the remaining funds will help pay for capital projects or build cash reserves for future use. **Note-these sheets do not include capital projects budgeted in their respective line items yet. **

    Page 5 – This sheet shows the Outside Organization requests. Revenues have been coming in less than budgeted in the past. As the sheet shows, there are seven organizations included for funding at the City Administrator’s recommended amount. Also, the Library transfer is complete and that money will now be transferred to Debt Service to help pay for the RCR Arena bonds.

    Page 6 – This sheet shows the Hotel/Motel funding and associated costs. The budget for revenues for FY 21 is $660,000. That has been reduced to $600,000 due to the COVID pandemic. At $600,000 collections, the fund could build the fund balance approximately $40,000 for Fiscal Year 2022 budget.

    Page 7 – This sheet shows the projected funding levels for Hotel/Motel Tax. The fund balance for this fund is projected to be at $0 at June 30, 2021. Visit Mason City, per City Council resolution, received 45% and the Park & Rec department receives 5%. The remaining funds are used for outside organization requests. $70,000 in Hotel/Motel funds are being transferred to the Debt Service Fund budget in FY 22 to help pay the costs of the RCR Arena outstanding debt.

    Page 8 – This sheet shows the history of collections for the Hotel/Motel Tax. Current use is 45% Visit Mason City, 5% Park & Recreation, and 50% for outside organization use.

    Page 9 – This page shows the taxes currently received for the General Funds and the proposed taxes for FY 2022. Museum, Airport, Library and Cemetery had a greater need than what was to be allocated based upon the wage and health insurance increase and reduction of other revenues. The General Fund has the entire amount of commercial rollback included and that is approximately $430,000 for FY 2022. The increase in taxable value had a positive effect on the FY 22 budget.

    Page 10 – This page shows the tax levy comparison for FY 2021 and FY 2022. Reserves have been used from General ($92,000) and Debt Service ($90,000). This has helped reduce the levy by approximately $0.15/$1000 valuation. The tax levy will decrease approximately $0.37/$1000 for FY 22. The State Rollback increased to 56.409% from the prior year rollback of 55.007%. This rollback adjustment amounts to a projected dollar increase of approximately $19.70 for a $100,000 home. The levy increase for Liability Insurance and Health Insurance increased $0.07 or $3.70 on a $100,000 home while the Police and Fire Retirement, 411 Levy and Debt Service levy decreased $.43 or $23.67, netting out at a decrease of approximately $19.82. After increasing the taxable valuation for the new rollback percentage, the taxes for a $100,000 home show an approximate tax liability very similar to FY 21.

    Page 11- This page shows the City’s taxable valuation over the past12 years. Starting in the FY 2015 tax year, commercial was taxed at the rollback value of 95%. For FY 2016 and beyond, the rollback is 90%. The State is supplementing cities with a backfill reimbursement equal to the reduction in commercial taxes. In FY 18 the reimbursement was 379,000, in FY 19 it was $358,000 and for FY 20 it was $389,000 For FY 21 it is projected to be $430,000. It is scheduled to be around $430,000 for FY 22 and should continue at that amount due to a cap placed on the state reimbursement. As the chart shows, total taxable valuation increased approximately 29 million. TIF usage was reduced for $62 million range in FY 21 to $45 million in FY 22.

    Page 12 – This sheet shows the preliminary impact on the City Taxes. As the sheet shows, there is a 0.02% decrease for property taxes with this budget.

    Page 13 – This sheet shows the amount of capital projects in the Enterprise Funds and the needed increase in rates to cover those costs as well as operating costs. There is $1,186,500 of projected bonding for the Enterprise Funds for FY 2022 and a rate increase for Water, Sewer and Sanitation.

    Page 14 & 15 – This sheet shows the outstanding debt of the City and future debt to issue. As the sheet shows, total debt principal is $62,055,500. The amount of projected debt added for FY 2022 CIP is approximately $11,632,500. It is anticipated to pay off $6,973,000 of debt in FY 22.

    Page 16 – This sheet shows the estimated constitutional debt capacity. The City has lost some capacity for general obligation debt due to recent bonding for the River City Renaissance Project.

    The information you have is the proposed operating budget for FY 2022. This budget will continue to offer services that we have in the past and is a balanced budget. There is a $0.36/$1,000 tax levy decrease for FY 2022 over FY 2021 with a 2.5% increase in the rollback, amounting to virtually no dollar increase in a $100,000 home for the year.

    Jacobson provided a general outline, explaining most of the increase was due to wages and health insurance or utility cost and in some areas it was an increase in the cost of software and referenced the payroll software in the Finance Department. He also mentioned there was an increase in demolitions and referred to the General Fund, advising there was a deficit of approximately $100,000, however the City had collected additional LOSST and CARES act monies. Also, he stated the Fund Balance Policy would be increased to $5 million for FY22 and stressed all other areas were balanced. Regarding the Downtown Reinvestment TIF he stated the surplus would be used in FY 23 to pay for the bonds on RCR and Southside Gateway collections would offset the current deficit in that fund and it was anticipated to have a positive fund balance in either FY 23 or FY 24. He concluded his comments by stating staff was proposing to use commercial rollback of approximately $120,000 in Debt Service from FY 22 to help lower the Debt Service Levy and mentioned from a planning standpoint FY23 would have 27 payrolls which was an additional cost that needed to be budgeted for.

    Discussion followed regarding the Library Fund, changes to the Finance Director’s title and salary, Outside Organizations, Hotel/Motel Reserve Projects and Property Tax Asking and Bond Amounts, Tax Summary and Comparison of Taxes and Outstanding Debt.

    The Mayor stated the Council had set the priorities and this had been a valuable experience, emphasizing the hard work began with City staff and they had done a great job, adding it wasn’t always easy and a lot of hard work had gone into it.

    CONSENSUS; Unless there were additional questions in the meantime it was the consensus of the Council to not hold the next Council Worksession and move things forward as outlined by staff.

    The Mayor adjourned the meeting at 7:52 P.M.

    /s/Bill Schickel
    Bill Schickel, Mayor

    /s/Aaron Burnett
    Aaron Burnett, City Clerk