FY24 Adopted Budget

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City of Iowa City Approved Budget for the Fiscal Year Ending June 30, 2024 & FY2023–2025 Financial Plan

Council:

Bruce Teague Mayor At-Large

Megan Alter Mayor Pro-Tem At-Large

Shawn Harmsen District B

Laura Bergus At-Large

Andrew Dunn At-Large

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John Thomas District C

Pauline Taylor District A

City Manager Geoff Fruin

Deputy City Manager Redmond Jones II

Assistant City Mgr Rachel Kilburg

Finance Director

Assistant Finance Director

Nicole Davies

Jacklyn Fleagle

Budget Management Analyst

Risk & Finance Assistant

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Angie Ogden

Michelle Cook

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CITY OF IOWA CITY, IOWA

FY2024 Adopted Budget

FY2023 – 2025 Financial Plan 2023 – 2027 Capital Improvement Plan

TABLE OF CONTENTS

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Introduction City Manager Address….....................................................................................................…......................................................................................................... 10 Strategic Plan…..............................................................................................................................….............................................................................................. 28 Other Planning Processes…..............................................................................................................................….......................................................................... 30 General Information…..............................................................................................................................….................................................................................... 32 Economic Overview…..............................................................................................................................….................................................................................... 36 Organizational Chart …..............................................................................................................................….................................................................................. 40 Department Summaries…..............................................................................................................................….............................................................................. 41 Budgetary Fund Structure…..............................................................................................................................…........................................................................... 275 Departments and Divisions by Fund…..............................................................................................................................…........................................................... 278 Financial Summary Preparation of the Financial Plan…..............................................................................................................................…............................................................... 283 Financial and Fiscal Policies…..............................................................................................................................…...................................................................... 289 Long Range Financial Planning…..............................................................................................................................…................................................................. 296 All Funds: Fund Summaries…..............................................................................................................................….................................................................................. 300 Revenue Summary by Fund…..............................................................................................................................…................................................................ 305 Revenue Summary by Type…..............................................................................................................................…................................................................ 306 Expenditure Summary by Fund…..............................................................................................................................…........................................................... 308 Expenditure Summary by Department…..............................................................................................................................…................................................ 309 Inter Fund Transfer Schedules…..............................................................................................................................…............................................................ 310 Personnel Full-Time Equivalents …..............................................................................................................................…............................................................... 313 General Fund General Fund Summary…..............................................................................................................................….............................................................................. 318 Assigned, Committed & Restricted Fund Balance…..............................................................................................................................…..................................... 331 General Fund Revenues…..............................................................................................................................…............................................................................. 332 General Fund Expenditures…..............................................................................................................................…........................................................................ 333 City Council…..............................................................................................................................…................................................................................................. 334 City Clerk…..............................................................................................................................…..................................................................................................... 335 City Attorney…..............................................................................................................................…................................................................................................ 336 City Manager: City Manager’s Office…..............................................................................................................................…........................................................................... 337 Communications Office…..............................................................................................................................…........................................................................ 337 Human Resources…..............................................................................................................................…............................................................................... 339 Human Rights…..............................................................................................................................…...................................................................................... 340 Economic Development…..............................................................................................................................…....................................................................... 341 Climate Action and Outreach…..............................................................................................................................…............................................................... 341 Finance Department: Finance Administration…..............................................................................................................................…........................................................................ 342 Accounting …..............................................................................................................................….......................................................................................... 345 Purchasing…..............................................................................................................................…........................................................................................... 346 Revenue…..............................................................................................................................…............................................................................................... 347 Police Department: Police Administration…..............................................................................................................................…........................................................................... 348 Support Services…..............................................................................................................................….................................................................................. 348 Field Operations…..............................................................................................................................…................................................................................... 352

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Fire Department: Fire Administration…..............................................................................................................................…............................................................................... 354 Emergency Operations…..............................................................................................................................…........................................................................ 355 Fire Prevention…..............................................................................................................................…..................................................................................... 356 Fire Training…..............................................................................................................................…......................................................................................... 356 Parks & Recreation: Parks & Recreation Administration…..............................................................................................................................…...................................................... 357 Recreation…..............................................................................................................................…............................................................................................ 359 Park Maintenance…..............................................................................................................................…................................................................................ 360 Cemetery Operations…..............................................................................................................................…........................................................................... 363 Library: Library Operations…..............................................................................................................................…............................................................................... 364 Library Foundation Office…..............................................................................................................................….................................................................... 367 Senior Center: Senior Center Operations…..............................................................................................................................….................................................................... 368 Neighborhood & Development Services (NDS): NDS Administration…..............................................................................................................................….............................................................................. 370 Neighborhood Services…..............................................................................................................................…....................................................................... 371 Development Services…..............................................................................................................................…......................................................................... 374 Public Works: Public Works Administration…..............................................................................................................................…................................................................ 376 Engineering…..............................................................................................................................….......................................................................................... 377 Transportation Services: Transportation Administration…..............................................................................................................................….............................................................. 378 Special Revenue Funds Community Development Block Grant (CDBG) …..............................................................................................................................…........................................ 380 HOME Grant…..............................................................................................................................…............................................................................................... 382 Road Use Tax Fund (RUT) …..............................................................................................................................…........................................................................ 384 Road Use Tax Operations…..............................................................................................................................…................................................................... 388 Other Shared Revenues…..............................................................................................................................…............................................................................. 391 Metropolitan Planning Organization of Johnson County (MPOJC) …..............................................................................................................................….......... 393 Metropolitan Planning Organization of Johnson County Operations…..............................................................................................................................….. 395 Employee Benefits Fund…..............................................................................................................................…............................................................................. 396 Emergency Levy Fund…..............................................................................................................................…................................................................................ 400 Affordable Housing Fund…..............................................................................................................................…............................................................................ 403 Iowa City Property Management Fund…..............................................................................................................................…....................................................... 405 Tax Increment Financing (TIF) Districts…..............................................................................................................................…..................................................... 410 Self-Supporting Municipal Improvement District (SSMID)…..............................................................................................................................…......................... 416 Debt Service Fund Debt Service Fund Summary…..............................................................................................................................…...................................................................... 420 Debt Schedules…..............................................................................................................................…........................................................................................... 425 Parking Fund Summary…..............................................................................................................................…....................................................................... 438 Parking Operations…..............................................................................................................................….............................................................................. 443 Transit: Transit Fund Summary…..............................................................................................................................…........................................................................ 446 Transit Operations…..............................................................................................................................…............................................................................... 451 Wastewater: Wastewater Fund Summary…..............................................................................................................................…................................................................ 455 Wastewater Treatment Operations…..............................................................................................................................…..................................................... 460 Wastewater Debt Service…..............................................................................................................................….................................................................... 464 Water: Water Fund Summary…..............................................................................................................................….......................................................................... 466 Water Operations…..............................................................................................................................…................................................................................. 471 Water Debt Service…..............................................................................................................................….............................................................................. 476 Enterprise Funds Parking:

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Refuse Collection: Refuse Collection Fund Summary…..............................................................................................................................…....................................................... 481 Refuse Collection Operations…..............................................................................................................................….............................................................. 485 Landfill: Landfill Fund Summary…..............................................................................................................................…........................................................................ 488 Landfill Operations…..............................................................................................................................…............................................................................... 493 Airport: Airport Fund Summary…..............................................................................................................................…......................................................................... 496 Airport Operations…..............................................................................................................................…................................................................................ 499 Stormwater: Stormwater Fund Summary…..............................................................................................................................…................................................................. 500 Stormwater Operations…..............................................................................................................................…........................................................................ 504 Housing Authority: Housing Authority Fund Summary…..............................................................................................................................…....................................................... 505 Housing Authority Operations…..............................................................................................................................….............................................................. 508 Capital Projects Fund Fund Summary…..............................................................................................................................…............................................................................................ 512 Summary by Category (Division)…..............................................................................................................................…................................................................ 515 Summary by Funding Source…..............................................................................................................................…..................................................................... 521 Annual Recurring Projects…..............................................................................................................................….......................................................................... 529 Project Summary by Name…..............................................................................................................................…......................................................................... 537 Unfunded Projects…..............................................................................................................................…...................................................................................... 653 Equipment Fund Summary…..............................................................................................................................….................................................................. 664 Equipment Operations…..............................................................................................................................…......................................................................... 667 Risk Management: Risk Management Fund Summary…..............................................................................................................................…...................................................... 669 Risk Management Operations:…..............................................................................................................................…............................................................ 671 Information Technology Services (ITS): ITS Fund Summary…..............................................................................................................................….............................................................................. 672 ITS Operations…..............................................................................................................................…..................................................................................... 674 Central Services: Central Services Fund Summary…..............................................................................................................................…......................................................... 676 Central Services Operations…..............................................................................................................................…................................................................ 678 Health Insurance Reserve….............................................................................................................................. 679 Dental Insurance Reserve….............................................................................................................................. 681 Statistics U.S. Census Data…..............................................................................................................................…....................................................................................... 685 Revenue Comparisons: Property Tax …..............................................................................................................................…........................................................................................ 686 General Fund…..............................................................................................................................…....................................................................................... 686 Hotel/Motel Tax …..............................................................................................................................…................................................................................... 687 Utility Franchise Tax Rates…..............................................................................................................................….................................................................. 687 Utility Rates…..............................................................................................................................….......................................................................................... 688 Property Tax Levies…..............................................................................................................................….................................................................................... 689 Property Tax Valuations…..............................................................................................................................….............................................................................. 690 Principal: Taxpayers…..............................................................................................................................…............................................................................................. 692 Employers…..............................................................................................................................…............................................................................................ 693 Sewer Customers…..............................................................................................................................…................................................................................ 694 Water Customers…..............................................................................................................................…................................................................................. 695 Internal Service Funds Equipment:

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Operating Indicators…..............................................................................................................................….................................................................................... 696 Department Statistics: Police…..............................................................................................................................….................................................................................................... 697 Fire…..............................................................................................................................…....................................................................................................... 701 Library…..............................................................................................................................….................................................................................................. 703 Senior Center…..............................................................................................................................…....................................................................................... 708 Transportation Services…..............................................................................................................................…....................................................................... 711 Neighborhood & Development Services…..............................................................................................................................…............................................. 713 Appendix Department Expenditure Comparison to State Forms…..............................................................................................................................…........................ 718 Budget Resolutions…..............................................................................................................................….............................................................................. 719 State Forms…...................................................................................................................................…..................................................................................... 722 ........................................................................... Changes from Proposed to Final Budget…..........................................................................................…... 740 .......................................................................... Transfer Resolution….................................................................................................................................. 741 .................................…...................................... State Property Tax Reform Impact Summary…........................................................................................... 744 .......................................................................... Glossary…..............................................................................................................................….................. 746

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INTRODUCTION

City Manager Address Strategic Plan Other Planning Processes

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General Information Economic Overview Organizational Chart

Department Summaries Budgetary Fund Structure Departments and Divisions by Fund

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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 another minor decrease 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 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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including $10,000 for a new staff and Board and Commission member diversity, equity and inclusion training series. Commitments to social justice, racial equity, and human rights are demonstrated in various department budgets in ways such as funding for crisis response services, transit ride voucher programs in Parks and Recreation and the Library, annual ADA improvement projects, and translation of communications materials. Climate Action: The budget again includes an emergency levy which is dedicated towards implementation of the Ci ty’s climate action plan and emission reduction goals. $150,000 is allocated to various commercial and residential energy efficiency and electrification rebate and incentive programs including $60,000 in Climate Action Grant Program funds. Resources are also provided for outreach and engagement activities including the Neighborhood Energy Blitz, Climate Ambassador and Resilience Corps programs, Root for Trees, and ClimateFest. Many of the City’s sustainability efforts are also incorporated i nto various master plans and capital projects such as tree plantings, prairie management, bike facilities, multi-modal roadway improvements, local foods efforts, community gardens, and waste reduction. Partnerships & Engagement: This budget includes funds to support various outreach events throughout the City such as Party in the Park and Rec ‘N Roll events, National Night Out and other proactive public safety outreach events, Emergency Services Youth Camp, and a focus on engagement of all ages through Recreation, Library, and Senior Center programming budgets. Neighborhoods & Housing: Another $1 million in the General Fund is earmarked for the Affordable Housing Fund. This is supplemented by additional affordable housing revenue streams including fee-in-lieu payments and Tax Increment Financing revenue. Support for Shelter House is also continued in this budget, which includes up to $30,000 for the winter homeless shelter and $30,000 to fund half the costs of 1.00 FTE Street Outreach position. An additional $3.5 million in American Rescue Plan Act funds is set aside for additional affordable housing initiatives, including eviction prevention efforts. $150,000 in consultant funds are allocated to the first year of a multi year process to overhaul the Comprehensive Plan, including review of possible parking, energy efficiency, and sustainable land use policies. This budget also includes a $5,000 increase (25%) to the annual Neighborhood PIN Grant Program, bringing the total to $25,000. Mobility: Climate Action Funds are provided for a comprehensive, organizational-wide Electric Vehicle (EV) Fleet Transition Plan and the EV Charging Installation Rebate Program, which promotes EV-readiness at multi-family residential buildings. $75,000 is provided annually through the capital improvement budget to make transit stop safety and amenity improvements. This budget also includes funding to continue implementation of the Bicycle Master Plan. Projects completed in 2022 include buffered bike lanes and a sidepath with the reconstruction of American Legion Road (Scott to Taft); and a 4- to 3-lane conversion on Madison Street (Court to Market) with the addition of bike lanes. Projects planned for 2023-2024 will significantly increase bike connectivity in the South District. Anticipated 2023 projects include a 4- to 3-lane conversion on Keokuk Street with bike lanes from Highway 6 to Sandusky Drive; bike lanes along Southgate Avenue (Gilbert to Keokuk); installation of Wetherby, Hollywood, and Lakeside bicycle boulevards Strategic Impact Areas

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(Bikeways), and construction of the easternmost section of the Highway 6 sidepath trail (Heinz to Fairmeadows). 2023 road construction and resurfacing projects will result in bike lanes on W. Benton Street (Mormon Trek to Greenwood) and Rochester Avenue (1st Ave. to Montrose) and existing bike lanes on Jefferson and Market Streets will be upgraded to buffered bike lanes. Anticipated 2024 projects include bike lanes along Sunset (Benton to Highway 1) and establishment of bike boulevards (Bikeways) along Emerald, Arlington, Oakcrest, Keokuk, East Washington, Friendship, and Westminster. Several pedestrian mobility and accessibility projects are also included in the capital improvement budget including sidewalk infill along Scott Boulevard, High Street, and Southgate Avenue in 2023. Further mobility improvements include an extension of the Highway 6 trail (Broadway to Fairmeadows) in 2026, additional pedestrian connectivity through the N. Gilbert Street reconstruction project in 2025, and annual funding of $100,00 for the ADA curb ramp program. Economy: This budget includes $25,000 to support a BIPOC Business Accelerator Program and $100,000 in Opportunity Funds set aside for small business grants and technical assistance. $569,300 in community development funding is also provided to support local arts and cultural and small business and entrepreneurial support agencies. Funds are also budgeted to support priority placemaking investments in partnership with the Downtown and South District SSMIDs. Anticipated 2024 ARPA allocations which advance the City’s strategic econom ic action items include $4 million to act upon recommendations stemming from the Inclusive Economic Development Plan and $750,000 to support a childcare wage supplement program. Approximately $1.8 million in local capital improvement plan funding serves as match to support a potential state grant which would advance riverfront projects in coordination with local entities. Safety & Well Being: Several strategic action items are advanced in the Safety & Well-Being category through this budget. An additional $5,000 to promote the 988-lifeline service is included along with cost-share funds to partner with CommUnity on a second Mental Health Liaison position. $9,000 is also provided for the Police Department to conduct headlight/taillight bulb replacement programs and other proactive vehicle repair programs as traffic stop alternatives. The City’s strong network of social services is supported through this budget, including another 3% increase in local funds (+18,393) to the Aid to Agencies Program, bringing the total funding (federal and local) of the Aid to Agencies program to $751,500 in Fiscal Year 2024. $3 million in ARPA funding is also designated for a social service capital grant program. The health and well-being of the older population is supported through an additional $750,000 in 2023 Capital Improvement Plan (CIP) funding for exterior improvements to the Senior Center, which supplements the $2.7 million previously allocated in 2022; $3.65 million in 2025 and 2026 CIP funding for interior improvements; and $40,000 in consultant funds for the Senior Center to launch a capital campaign to supplement these improvements.

Strategic Resources:

Staffing & People: This budget upgrades an existing 0.50 FTE Outreach & Engagement Specialist position to full-time (+0.50 FTE) and includes an addition of 11.50 full-time equivalent

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(FTE) positions to address acute needs in our operations. 9.50 FTE are funded with City funds (5.90 FTE from General Fund revenues) and 2.00 FTE are supported by external sources:

• 0.50 FTE Civilian Police Accreditation Manager • 1.00 FTE Human Rights Engagement Specialist • 1.00 FTE Grant Coordinator • 1.00 FTE Police Sexual Assault Investigations Officer • 2.00 FTE Firefighters • 1.00 FTE Engineering Asset Management Technician • 1.00 FTE Parking Enforcement Attendant • 1.00 FTE Water Maintenance Worker I • 1.00 FTE Landfill Maintenance Worker I • 1.00 FTE Housing Authority Family Self-Sufficiency Coordinator (funded with federal HUD funding). • 1.00 FTE Animal Center Volunteer Program Assistant (funded with Animal Center Foundation funding). The addition of the public safety positions aims to address high levels of burnout and overtime in these operations. The Police Accreditation Manager will enable the Department to establish a centralized Internal Affairs approach to enhance accountability review processes. The move will also help reduce internal affairs workload on watch supervisors and provide more time for field inspection of operations. The Police Officer position will be assigned to the Investigations Unit as a second Sexual Assault Investigator to help respond to the 24% increase in sexual assault investigations from 2020 to 2021. Sexual Assault investigators logged 655 hours of overtime in 2021 and 545 hours in the first 9 months of 2022. Finally, the Fire Department has two new positions in the budget to help alleviate increasing overtime demands and record call for service numbers. The two new firefighters will be strategically utilized by the Fire Chief as floating positions until such time station five is constructed. At that time, these Firefighter positions will be counted toward the new station’s staffing levels. Facilities, Equipment, and Technology: Funding is provided in several operations to support data collection and management for the 3-year implementation of Cartegraph asset management software. The new Asset Management Technician position, which is funded by both General Fund and Enterprise Fund operations, will provide full-time staff support to this initiative. $4.7 million is transferred to the Facility Reserve Fund through a Fiscal Year 2023 budget amendment, bringing the Facility Reserve Fund unassigned fund balance to $13.4 million. These funds will be critical for several major upcoming facility replacement and renovation projects. No Fiscal Year 2024 transfer is planned for the Facility Reserve Fund, however it is hoped that any surplus funds will be directed to the Emergency Reserve Fund and the Facility Reserve Fund. Financial: This budget maintains a steady tax rate and adopts several rate and fee increases to ensure fiscal health and stability. The “Fiscal Year 2024 Budget Overview” section of this docu ment further details the City’s tax and fee rates and debt service strategy for F iscal Year This budget also includes an hourly wage increase from $16.25 to $21.25 per hour for Crossing Guard temporary staff positions to encourage interest and retention in these roles.

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2024. The strategic goal to annually increase the Emergency Fund Balance by 5% is met through a $258K transfer in the Fiscal Year 2023 budget amendment, bringing the total Emergency Fund Balance to $5.4 million. Investment in Master Plans and Core Services As previously outlined, this budget provides funding to support continued implementation of various City Master Plans including the Climate Action Plan, Bike Master Plan, and Affordable Housing Action Plan. Over $27 million in the five-year capital improvement plan is budgeted for parks and recreation projects, many of which implement the Parks & Recreation Gather Here Master Plans. The Fiscal Year 2024 CIP budget includes funding for playground and/or shelter improvements at Hunter’s Run and Happy Hollow Parks, redevelopment of the Terrell Mill Skate Park, Mercer Park Ball Diamond improvements, and Hickory Hill Park Conklin Street entrance improvements. Funding is also earmarked to respond to recommendations from the Recreation Master Plan addressing major community interests, such as City aquatics facilities. Finally, the bulk of this budget is dedicated towards ensuring core service levels are maintained, including responsible funding levels for roadway repairs and equipment replacement. In addition to annual pavement rehabilitation program funding, several important road rehabilitation and reconstruction projects are planned for 2023, including continuation of the Rochester Avenue (First Ave. to Ralston Creek) reconstruction project, Benton Street rehabilitation, and the Gilbert Street Bridge replacement. Various water, sewer, and landfill projects are also planned in accordance with replacement and maintenance schedules. Inflation, supply chain issues, and labor shortages have had significant impacts on operational and project budgets and completion timelines. The Fiscal Year 2023 amended and Fiscal Year 2024 adopted budgets reflect significant increases in essential supplies and services line items. Combined, gas and diesel expenses increased by 54% in Fiscal Year 2024 over Fiscal Year 2022 levels (+$922K). Heating Fuel expenses increased 87% from Fiscal Year 2022 to Fiscal Year 2024 (+$244K) and several water treatment chemical line items doubled in price for Fiscal Year 2024 over the previous year. Additionally, rising insurance premiums are expected to continue in Fiscal Year 2024, which include 10 to 20% premium increases across the board in Risk Management. As these essential costs eat up more of the available resources, value-added programs and services feel the squeeze in the form of stagnated or reduced budget allocations.

Budget Impacts and Financial Goals This budget was developed within the context of several significant financial impacts:

• The final year of the phased 2013 State of Iowa property tax reform, including an estimated $146 million loss in multi-residential taxable value in Fiscal Year 2023 and an anticipated loss of well over $200 million in Fiscal Year 2024. • Beginning in 2023, commercial and industrial property tax backfill payments (which have historically totaled $1.5 million annually) are being phased out over a five-year period. In Fiscal Year 2024 the remaining original commerical backfill payment is estimated to be $926,000, or roughly two-thirds of the original commitment the State of Iowa made in 2013. • Another decrease in the State residential rollback rate (anticipated to continue).

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• Economic inflation, higher costs for goods and services, and ongoing financial impacts caused by the pandemic, incuding continued pandemic-related lags in revenue for some operations. 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 Strat egic 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. Ensure reliability of core services and infrastructure remains high while balancing cost impacts on residents and businesses.

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 maintains 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

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