FY2023 Adopted Budget

In light of these impacts, the preparation of this budget was guided by three primary financial goals that seek to establish a sound fiscal strategy for the upcoming year and beyond. First, within the context of heightened financial challenges, the budget aims to prioritize adequate resources for making substantial progress on City Council’s Strategic Plan priorities and adopted Master Plans. The preceding pages of this letter outline several of such investments. Second, this budget continues to respond to phased State property tax reforms while also confronting a plateau in taxable property value and continued financial impacts caused by the COVID-19 pandemic. In recent years, robust growth in taxable valuations has offset the losses associated with the property tax

Financial Goals Continue to dedicate resources towards advancing City Council’s Strategic Plan priorities and adopted Master Plans. Seek fiscal stability and maintenance of service levels through competing financial pressures of the COVID-19 pandemic, the phase out of the property tax backfill, and the final years of the phased 2013 tax reform. Support households and businesses through the pandemic’s impact with stable utility rates, fees, and continued efforts to lower the City’s tax rate.

reform and enabled the City to fund new initiatives, improve service levels, and reduce the tax levy rate. However, while development has rebounded slightly from 2020 levels (which was significantly impacted by the pandemic) assessed growth has slowed from the strong levels in development over the previous decade and is expected to level off in the coming years. This is compounded by the phased loss of commercial/industrial property tax reimbursement payments (“backfill”), which the City had been anticipating for several years. Thus, like past budgets, this budget includes measures to financially prepare the City before the full impacts of these tax reforms are realized. This enables us to shift resources and adjust operations gradually, avoiding abrupt service disruptions or steep tax rate increases. An example of this preparation includes the aforementioned Emergency Reserve Fund, which was created after the 2013 tax reform legislation and carries a balance of approximately $5.1 million. However, while the City has taken such steps to manage the impacts of tax reform, maintaining service levels will require prudent budget decisions as the next two years will be the most difficult to navigate since the state reform efforts were approved in 2013. Finally, while the overall impact of tax and fee changes on our community is carefully evaluated each budget cycle, this budget remains especially mindful that many households and businesses continue to experience pandemic-related financial pressures. Overall, the Fiscal Year 2023 impact to households is a 0.1% decrease in City taxes and utility fees over Fiscal Year 2022. This includes a proposed $0.04 decrease in the City property tax rate and a $3 per month increase in refuse fees (reflecting increases of $1.50 in Yard Waste, $.50 in Recycling, and $1 in Refuse) to support recently expanded service offerings and balance growing expenses in that fund. Community Fiscal Health and Outlook Iowa City benefits from a strong local economy anchored by the presence of the University of Iowa and the University of Iowa Hospitals and Clinics. The local economy consists of a diverse set of successful industries that together help sustain one of the most consistent stretches of low

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