FY2024 Proposed 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 next year and beyond: First, within the context of heightened financial challenges, the budget aims to prioritize adequate resources for making progress on City Council’s Strategic Plan goals and adopted Master Plans. Second, this budget continues to respond to phased 2013 State of Iowa property tax reforms while also confronting limited growth in taxable property values, the phased loss of commercial and industrial property tax reimbursement payments (“backfill”), and general economic inflation.

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 rising costs and inflation, the phase out of the commercial property tax backfill, and the final years of the phased 2013 tax reform.

Finally, as the City navigates the next few years of strong financial headwinds and competing budgetary pressures, it will be critical to ensure sufficient resources are provided to maintain core service levels. As such, this budget recommends a stable property tax rate and several utility rate and fee increases to help address some acute challenges in our core service areas. Any new, non essential or strategic initiatives must be carefully evaluated for long-term financial impact and will likely need to rely on ARPA funds or other alternative funding sources to implement. Fiscal Health and Outlook In general, 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 unemployment rates in the nation. The City of Iowa City has a rich tradition of responsible budgeting policies which has created a strong financial foundation and helped the community weather both past and recent economic recessions while sustaining top-notch service delivery. In 2022, Moody’s Investors Service reaffirmed its highest quality bond rating (Aaa) for the City’s general obligation debt. Moody’s notes factors that could negatively impact the City’s bond rating include a substantial and sustained reduction in reserve funds or large growth in debt leverage. Iowa City’s bond rating is the product of prudent budgeting and long-range financial planning. Ultimately, our strong financial position lowers the cost of borrowing and ensures more of our community’s dollars are spent on service delivery and Strategic Plan priorities, rather than interest payments. Despite the stable financial position of the organization, the public should be aware of the economic trends shaping the community. Iowa City has many attributes that attract new residents to our city. A strong job market, good schools, and diverse cultural amenities all contribute to the desirability of our area for families, retirees, and young professionals to make their permanent homes. New residents, including students, bring a social and economic vibrancy that helps define Iowa City. The City Council has adopted several policies and initiatives in recent years to maintain and enhance our positive attributes. However, population growth has a profound effect on service Ensure reliability of core services and infrastructure remains high while balancing cost impacts on residents and businesses.

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