MASON CITY | Nicole Marsh has lived on the 100 block of Fifth Street Northeast for the past five years. And in that time, she's seen some crazy stuff happening in and near the boarded-up house next door.
One time, she believes a bathtub was thrown out of a second-floor window. Tree branches have fallen on one of her neighbor's cars. She's also called police when she's found needles in the backyard.
And ultimately, she's nervous about people "squatting" in nearby boarded-up homes.
"They think boarding these houses is going to help, and it's not," said Marsh, 40. "I have a 7-year-old boy, and this is scaring me."
Marsh was talking about 108 Fifth St. N.E., a property overgrown with vegetation and has its front door and some windows boarded up. It's one of three houses boarded up on the block, with another one closed off at 117 Sixth St. N.E.
This past week, the Globe Gazette spoke with city officials and neighbors to examine the current status of the properties. It's unclear what the future of some of them are, but all have been inhabitable at least three years.
Mark Laurenz, pastor of Bethlehem Lutheran Church, said all four properties — 108, 122 and 130 Fifth Street N.E., along with 117 Sixth St. N.E., have been boarded for between three to six years.
Laurenz, who also helps run the attached Sunbeam Christian Childcare and Preschool, added that the neighborhood isn't a bad one, but wishes more action was taken on the four properties in question.
"If we make the sidewalks nice, why not tear down the houses?" he said.
One of the properties, 130 Fifth St. N.E., is currently owned by Russ Hardy. Hardy, who said he has owned the rental house for a couple years, said it is "in rehab," and hopes it can be rented out to tenants by late November or early December.
He added he isn't concerned about the other nearby boarded-up properties, because with enough work, they can all be made inhabitable.
"When these apartments are finished and are pleasant places to live ... they will rent in spite of boarded-up houses nearby," he said of his property.
According to city property records, the other three properties in question are owned by Thomas and Cassandra Rattay. The Rattays could not be reached for comment Friday when a Globe reporter knocked on their door.
Ray Quayle, Mason City's rental housing inspector, said the three buildings on the 100 block of Fifth Street Northeast had been white-tagged at least three years ago, meaning they are "uninhabitable." That is determined by looking at any structural issues, possible bed bugs, or any other health and safety issues that may arise, he added.
More specifically, 108 Fifth St. N.E. has been boarded up for at least five years, according to Quayle.
He admitted that "squatters" getting into the boarded-up buildings is an issue, but that demolition of the houses is hard to pursue given the rights property owners have.
"The problem is sometimes the banks aren't cooperative with getting these things done," Quayle said of the process of demolition. "Again, no matter what, people still have rights, and they're going to exercise them."
Steven Van Steenhuyse, Mason City's development services department director, said property owners have constitutional rights, and that as long as some improvements are made and the building is safe to the public, city officials don't have much power to pursue demolition.
Currently, the city uses the 1997 Uniform Code for Abatement of Dangerous Properties to determine whether a building should be demolished, according to Steenhuyse. He added officials have been examining that and other city codes for the past two years, and they are looking at adopting a newer international property code.
"If it's started to deteriorate where pieces of it could fall on the sidewalk, then we could take action," Steenhuyse said about a possible demolition scenario. "But as long as it's safe and secure, we can't do anything about it."
Those who live and work in the neighborhood, however — including Lavrenz and Marsh — express concerns in just letting properties sit vacant, ranging from the neighborhood's general appearance to possible safety issues.
Lavrenz added, however, that the city has a large workload in terms of these types of properties.
"They have to deal with flooded homes and other areas," he said. "They have taken down a lot of houses in the past two years."
Not everyone, however, is convinced. Marsh said the problem is not restricted to her street, and is indicative of a more important issue.
"Mason City is dying, if you want my honest opinion," she said. "The town's very run-down, and it's a problem."
It took three patches totaling more than $260 million in spending cuts and borrowing, but the books on the state budget year that ended June 30 finally were closed last week.
Yet more difficult budget work lurks ahead.
When state lawmakers return to the Capitol in January, they will work on the state budget that begins next July 1 and starts with a $111 million repayment to the state’s reserve accounts.
That puts the state budget behind the 8-ball from the start and will create significant hurdles for lawmakers who hope to increase funding for short-staffed state agencies, public education and water quality initiatives and pay for new budget elements such as tax reform and school choice programs.
“I believe we’re going to have challenges for (the next budget year),” David Roederer, the budget director for Gov. Kim Reynolds, told reporters Wednesday. “It’s probably going to be a challenge.”
During the budget year that ended June 30, less money than expected came into the state’s accounts, and because of that, lawmakers and the governor had planned to spend more than, as it turned out, they could afford. In order to balance the budget, they made $118 million in spending cuts and borrowed another $144 million from the state’s reserve accounts.
Lawmakers will be watching revenues in hopes of avoiding a repeat during the current budget year.
When they return to Des Moines for the 2018 legislative session, lawmakers will debate and set spending for the state budget year that begins next July 1.
The state budget’s future will be cloudy until next month, when the nonpartisan panel responsible for estimating future revenues is scheduled to meet and publish its financial forecast. The panel will meet again in December and, if necessary, revise its estimates.
That December estimate will be used by state lawmakers when they draft next year’s budget.
Before writing a single item into the budget, they will start with a $111 million payment back to the state’s reserve accounts to repay money borrowed to fix this past fiscal year's budget issues.
“I’m preparing for a challenging budget year,” said Sen. Charles Schneider, who heads the Iowa Senate’s budget committee.
Schneider added, however, that he is hopeful revenues will remain steady and perhaps even increase beyond expectations, which would lessen the burden on those responsible for drafting the next state budget. Schneider is hoping, for example, that federal tax reform, if passed, could result in additional state revenue.
Reynolds said she plans to recommend state agencies plan for a status quo budget — no increases but no reductions — and she and her staff will continue to monitor revenues as they come into the state.
Meantime, Reynolds said she will do what she can to spur growth in Iowa’s economy.
“We’ll have the departments come in with a status quo budget, and then we’ll take a look at the revenues that we have to put our budget together with in December,” Reynolds said. “In the meantime, what I’m doing is looking for ways that we can grow the economy, and that means creating a competitive business environment.”
If the next budget turns out be another tight one, Reynolds and lawmakers will face significant challenges in funding not only basic services that Iowans expect, but also to find money for new initiatives.
Primary among the latter is tax reform, a top priority of Republicans who in the 2016 elections gained full lawmaking control at the Iowa Capitol for the first time in two decades. Republican lawmakers strongly crave tax reform that includes lowered rates, but such action typically comes with a hefty price tag because it reduces the amount of revenue coming into the state.
Republican leaders acknowledged passing tax reform during the 2018 legislative session could prove challenging, given the current state of the budget. However, they remain hopeful they can pass something.
Doug Gross, who was former Gov. Terry Branstad’s chief of staff in the 1980s and the Republican gubernatorial candidate in 2002, put it more bluntly:
“Next to impossible,” Gross said. “Tax reform costs money, and when you don’t have any money, it’s hard to pay for it. ... You might tinker, but you won’t do reform without money.”
Schneider is not yet ready to give up on passing tax reform and said Republican senators are working on a plan, but he acknowledges passing anything with a high cost will prove difficult.
Schneider said other states have passed tax reform measures that do not kick in until the state budget is sufficiently healthy, and that could be a model for Iowa next year. For example, he said a reform package could lower income tax rates by a certain percentage if the state’s general fund revenue grows a certain percentage.
“I think we’ll be able to do something, I just don’t know how significant it will be,” Schneider said.
The recent need for budget adjustments, especially midstream, may lead Republican leaders in the near future to be stingier with state spending.
State law forbids spending more than 99 percent of the money available. Most years, state spending is set at or near that 99 percent level.
But key Republican lawmakers said they think it may be more prudent to set spending levels slightly lower in case revenues do not match expectations.
“I think that definitely needs to be a part of our conversation right now,” said Rep. Pat Grassley, who leads the Iowa House’s budget committee. “From my perspective, I think it is something that we definitely have to entertain, maybe being a little more conservative with our budget. ... We need to be prepared to spend less if this trend continues.”