FY25 Proposed Budget

 The continued phase out of the commerical and industrial backfill from the State of Iowa which was previously approximately $1.5 million and is projected to be only $617,000 in Fiscal Year 2025 before being fully zeroed out in Fiscal Year 2027.  The elimination of the Emergency and Library levies and additional growth restrictions placed on city budgets in the 2023 State of Iowa proprty tax reform legislation. The two levies totaled .47 cents per $1,000 of taxable property valuation and will be fully phased out of the combined General Fund levy over the next few years. 

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 despite compounding financial pressures due to state property tax reform and escalating costs of operations.

A sharp drop of 8.3% in the State’s residential rollback rate, the single largest drop since the late 1970s. The impact of this drop is significant for Iowa City as multi-family properties were now classified as residential due to the 2013 State of Iowa property tax reform law.  Economic inflation, higher costs for goods and services, and ongoing financial impacts caused by the pandemic and assocaited economic recovery. 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 the 2013 and 2023 State of Iowa property tax reform laws while also confronting macro-economic inflationary impacts on services and capital projects. 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 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 long tradition of responsible budgeting policies which has created a strong financial foundation and helped the community weather both past and recent economic downturns while sustaining top-notch service delivery. In 2023, Moody’s Investors Service reaffirmed its highest quality bond rating (Aaa) for the City’s general obligation debt. Moody’s noted 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 ‘ exceptional budget management practices, policy credibility and effectiveness, Ensure reliability of core services and infrastructure remains high while balancing cost impacts on residents and businesses.

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