Despite substantial dip in property valuation, city budget shows a surplus

By James Grob, jgrob@charlescitypress.com

Charles City Administrator Steve Diers has a budget — and much to his surprise, it’s a surplus budget.

“After I put all the numbers together, we actually had a surplus of about $22,000,” Diers told the City Council on Tuesday. “I was pleasantly surprised with that.”

The reason for the surprise was the city’s taxable property valuation has dropped significantly for the upcoming new fiscal year, reducing the amount of property taxes the city can collect at a time when increased expenditures are putting bigger demands on the city budget.

Diers told the council at last Thursday’s budget meeting that the city’s current fiscal year property valuation — the value set by the assessor of all taxable property in the city limits —  was about $272 million.

For the new fiscal year that will begin July 1, that number will be a little over $258 million — a $14 million difference, or a drop of a little over 5%.

Diers called the drop in valuation “mind-boggling,” adding, “I’ve never seen a drop like this.”

Additionally, the state rollback percentage for next fiscal year will also reduce the amount of property value the city can collect taxes on.

Diers said that in all his years of city budgeting, he’s never seen such a large reduction in general revenues because of those valuation changes.

“I guess I don’t understand why we’re seeing a reduction, but that’s what we’re seeing,” Diers said. “There’s never a lot of meat on the bone to start with … there’s not a lot to trim.”

After crunching a lot of numbers between Thursday and Tuesday, Diers estimates that revenues for the upcoming fiscal year are to be $4,173,000, while expenses are estimated to be $4,151,000.

“The good news is, as it sits right now, I haven’t had to make any major operational changes within the general fund budget,” Diers said. “In the long term, though, that’s not sustainable.”

Diers said he was able to fund a lot of items from the short-term borrowing process, which amounted to $81,000 that were in the general fund.

Diers was also able to fund some things in the Street Department that were funded in the general fund that were eligible to be paid via road-use tax, which amounted about $42,000 of annual operating expenses. Additionally, the TIF reimbursement this year is $130,000 more than average.

Also at Tuesday’s budget meeting, Diers reviewed the levy sheet and where the city stood with that, how that translates into various funds and how it directly relates to where the city is at with the general fund.

Diers said that the city was looking at a total city property tax levy rate of about $16.60 for fiscal year 2022-23, up 62 cents or about 3.9% from $15.98 for the current fiscal year.

“All things considered, I don’t think that’s terribly bad,” Diers said. “With the lower valuations, rates are going to rise.”

Diers was able to make substantial cuts in property insurance rates and employee benefits from his initial projections.

“I was able to cut that down (benefits) by $200,000, because that fund is sitting very well from a cash perspective,” he said. “That fund has been building up over the last several years, so it could stand to cut back and spend down some of that cash.”

The council also discussed outside agency requests on Tuesday. Initial talks are that Crisis Intervention will be awarded $2,000, the Charles City Arts Center will be awarded $3,000, and Save The Depot will be awarded $2,500.

The next budget workshop meeting will be Thursday, Feb. 3.