FY25 Proposed Budget

2. Other City Taxes - This category, estimated at $3.3 million in fiscal year 2025, includes Hotel Motel Taxes of $1,750,400, $407,800 in gas and electric excise taxes, and $1,116,700 in utility franchise taxes. The fiscal year 2025 budget is an increase of 0.3.% over the fiscal year 2024 revised budget of $3.3 million, and there is an average increase of 7.4% over the last five years. a) Hotel Motel Tax: This revenue source is a state-administered tax. Estimated at $1,750,400 in fiscal year 2025, the seven percent (7%) tax on gross hotel/motel room rental receipts is distributed as follows:

Convention & Visitor's Bureau 25.00% Police Patrol 47.50% Parks & Recreational Facilities 27.50% Total Hotel Motel 7% Tax 100.00%

In addition, fifty percent (50%) of the hotel/motel taxes generated by the Hilton Garden Inn are transferred to the Tax Increment Financing Fund and then rebated back to the developer. This agreement started in fiscal year 2018 and will continue until fiscal year 2029. b) Utility Replacement Excise Tax: The Gas and Electric Excise tax is collected on the generation, distribution, and delivery of electricity and natural gas. This tax replaced the taxation on utility property in 1999. Cities are required to calculate property tax revenues with and without gas and electric utility property valuations. The calculated difference is required to establish the General Property Tax Equivalents which is the c) basis of the Iowa Department of Revenue distribution formula. d) Utility Franchise Taxes on utility customers: Senate File 478 was enacted by the Iowa state legislature during its 2009 session, establishing cities’ right to impose a franchise tax on gas and electric utilities. On February 16, 2010, the Iowa City Council passed and approved an ordinance establishing a one percent (1%) tax to be expended for the following purposes: 1) Inspecting, supervising and otherwise regulating the MidAmerican Energy Company’s gas and electric franchises. 2) Public safety, including the equipping of fire, police and emergency services. 3) Public infrastructure to support commercial and industrial economic development. $1,116,700 estimate for fiscal year 2025, approximately $753,900 will remain in the City’s general fund for maintenance of street right-of-way and for operational costs associated with Fire Station #4. The remaining $362,800 is for capital improvement projects (CIP) in the right of way.

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