FY2024 Proposed Budget

To the Honorable Mayor and City Council Members, It is my pleasure to submit Iowa City's operating and capital budget for Fiscal Year 2024. Although Iowa Code only requires formal adoption of an annual budget, we have included a three-year financial plan (FY 2023-2025) and five-year Capital Improvement Program (2023-2027) for planning purposes. The budget is one of the most important documents the City prepares because it identifies the services to be provided and the mechanisms to finance those services. Any future modifications of this budget will be fully disclosed to the City Council and general public through formal City Council actions at public meetings, in accordance with State of Iowa law. This budget aims to provide resources to further strategic priorities, implement adopted master plans rooted in public input, and provide reliable and efficient municipal services. The budget also contains prudent contingency line items and reserves which help the City weather both unexpected expenditures and revenue shortfalls. However, the current economic climate and the final years of implementation from the State of Iowa’s 2013 property tax reform have resulted in significant and still emerging budgetary strains. In Fiscal Year 2023, the City’s taxable valuation declined for the first time in recent history as state-mandated valuation rollbacks outpaced taxable growth and economic activity stagnated through the pandemic. The continued plateau in development activity resulted in only a minor increase in taxable values for Fiscal Year 2024. The financial strain from the State of Iowa tax reform and gradual recovery of the local economy is compounded by inflationary pressures that are driving up operating and capital costs and diminishing the City’s purchasing power. Any further budgetary pressures, such as additional State of Iowa mandated property tax reform measures or further inflationary increases, could drive impacts to service levels in the coming years. Additionally, the City’s flexibility to pursue bold investments in new initiatives with local dollars will be limited and the City will need to rely heavily on federal American Rescue Plan Act (ARPA) funds as the primary funding source for new major initiatives. Although I remain confident in the City’s financial foundation, the recommended budget keeps discretionary expenditure growth to a minimum due to these pressures. Resources were prioritized to advance the City Council’s Strategic Plan, implement various adopted master plans, and support core service levels in critical areas such as public safety, transportation infrastructure, and our public utility operations. Investment in the City Council’s Strategic Plan The following section highlights investments this budget makes in the values, strategies, action items, and resources prioritized in the City Council’s Strategic Plan. Strategic Values Social Justice, Racial Equity, and Human Rights : For the second year, $100,000 is provided for the Social Justice and Racial Equity Grant Program and $1 million in Black Lives Matter funding is carried over from previous fiscal years. Sponsorship funds are included for historical commemorations such as Martin Luther King Jr. Day and Juneteenth. Additionally, funding for trainings and programs coordinated by the Office of Equity & Human Rights are provided,

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