Hillsboro weighs utility rates

By JUDD WEIL

Staff writer

Hillsboro City Council discussed utility rates, spending, and long-term finances Tuesday after a review showed city reserve balances below policy targets.

Interim administrator Michael Webb told council members the city was not facing a financial crisis but should address declining reserves before they become a larger issue.

Reserve balances at the end of 2025 stood at 4.8% in the general fund, 7.9% in water, 12.8% in sewer, and 11.7% in electric. City policy calls for reserves of about 25% in those funds.

Webb noted that the city had become increasingly dependent on transfers from other funds to support general operations. Those transfers have grown from roughly $700,000 in 2023 to a nearly $1.2 million budgeted this year.

Future budgets likely will require some combination of spending reductions, utility-rate increases, or property-tax adjustments, Mayor Lou Thurston said.

Council members agreed utility rates should be reviewed before fall budget discussions.

Part of the discussion centered on whether extensive hail repairs across the city could generate additional sales-tax revenue.

Thurston also noted Hillsboro’s finances differ from many communities’ because large tax-exempt institutions such as Tabor College and USD 410 rely on city services while not contributing property taxes.

Meeting as the public building commission, council members approved a statement of intent to pursue financing for a new fire station and other public safety facilities through revenue bonds of up to $5 million. The commission also approved an $8,600 preliminary design and budgeting proposal from NF Construction.

The actions do not authorize construction or issue debt but allow planning to continue.

In other business, council accepted a $15,000 AARP Community Challenge grant for five pickleball courts.

Combined with other grants and donations, about $72,200 has been committed to a project expected to cost between $100,000 and $120,000.

Council members also changed residency requirements for the city administrator position, allowing the administrator to live in Hillsboro or an unincorporated area of Marion County but not in another incorporated city within the county.

Webb reported hail-damage claims for 12 city vehicles totaled $47,060.94.