Iola’s 2023 budget took center stage Monday as Iola City Council members continue to debate what could be one of the city’s largest property tax hikes in recent memory.
As is, the budget’s general fund would be paid for with an ad valorem tax levy of about 54.4 mills, or a 6.5-mill increase over what taxpayers paid this year.
For perspective’s sake, the owner of a $75,000 home would pay about $470 annually to support Iola’s budget, an increase of about $56 from this year. (Of note, this does not include property tax obligations to support the county, USD 257 or Allen Community College.)
Council members scheduled an Aug. 22 budget hearing, at which time they’ll be asked to ratify next year’s spending plan.
CITY ADMINISTRATOR Matt Rehder spelled out the reasons why Iola’s general fund has taken a hit over the last few years, including the Council’s decision in 2019 and 2020 to reshape the city’s salary schedule, to make Iola more competitive as an employer with surrounding municipalities.
That decision added about $450,000 to Iola’s spending obligations, Rehder noted, without subsequent increases in revenue to pay for it.
Additionally, the city’s gas reserves have dropped, which means the city likely will have to hold back a portion of its planned gas fund transfer to the general fund. Council members previously adjusted the natural gas rate structure to address that shortfall.
Iola traditionally supplements its general fund with utility reserves to help keep property tax levels steady.
But as costs of doing business increase, and the city is at times hesitant to raise utility rates, it’s made for some austere budgets, Rehder said.
“These were adjustments that needed to be done,” Rehder said. “Now, we’re just paying for it ourselves.
“Our finances are OK,” Rehder continued. “They’re not great, and they’re not terrible. … We’re not going to go bankrupt tomorrow. The biggest financial issues, I’ve brought to your attention, and you’ve addressed them.”
That said, “I think the government has been under-funded here,” Rehder continued. “With all the things we do. People don’t realize all the stuff we do. That’s a lot of services, and it has been on a thin budget.
“I don’t mean to sound a bunch of alarms,” he said. “We’re OK now. It’s just the way I manage my philosophy. We need to address these things beforehand,”
Rehder’s comments came after questioning from Councilman Nickolas Kinder.
“It seems like Iola kicks the can down the road in water, gas, in the general fund, and then we have to do things like this in 10 or 15 years,” Kinder said. “Is there something the Council or city can do to make regular review of those every few years, so these increases are more gradual than all at once?”
“Frankly, I’d be derelict in my duty to not bring it to your attention,” Rehder responded.
Mayor Steve French noted discussion like Monday’s are “the tough part” of being in city government, “That nobody likes to do.”
“Our administrators have done a pretty good job,” French said.
Council members traditionally are reluctant to raise rates through utilities or property taxes, French continued, because they know folks around town are struggling.
“That’s the real world,” he said. “We have a lot of people on fixed incomes. Unfortunately, our bills keep coming in. That’s the business side of it.”
With inflation rates skyrocketing this year, it stands to reason Iola must raise rates, the mayor continued.
THE mill levy hike proposed by Rehder includes a 1.5-mill increase into the city’s industrial fund, which would be targeted for economic development.
Rehder proposed the city increase its economic development payment to Thrive Allen County to $50,000 annually — funded through the mill levy hike — with the hopes that Allen County and City of Humboldt do proportionally similar increases.
However, Councilman Carl Slaugh said he would be opposed to such a hike on Iola’s front.
“I’m looking for any way we can reduce the size of that (tax) increase,” Slaugh said.
IN A RELATED matter, Councilwoman Kim Peterson asked Rehder about how the city is dealing with gas prices today.
“We’ll be checking the bottom line,” Rehder replied. “We’re gonna bust those line items. We did not budget for gas at these prices.” Rehder is uncertain whether fuel budgets have already been used up. “I’m assuming we’ve gotta be getting close.”
Assistant City Administrator Corey Schinstock said Departments are absorbing those added fuel costs by cutting back elsewhere in their respective budgets.
“We’re not in any sort of panic mode, but it’s definitely something we talk about in every staff meeting,” Rehder said. “We’re not going on unnecessary trips. Of course with fire and EMS, all trips are necessary. But our other departments are cutting back on travel, buddying up in vehicles, taking those kinds of steps.”
Rehder promised to keep the Council advised on how fuel budgets are doing for the balance of the year.
IN OTHER news, Council members were notified of the hiring of Sarah McDaniel and Tristan Roegner for the Fire/EMS Department.
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