FY26 Proposed Budget

was reviewed and updated in December 2024 to reaffirm its vision and strategies, account for changing circumstances, and further focus desired action steps. The following section highlights major actions incorporated in this budget that helps implement this plan.

Fare-Free Transit

Fare-free transit has been a notable success with passenger trips increasing by more than 40% in the first year and continued robust growth in year two of the pilot offering. The public also indicates improved experiences with transit. In a representative survey of community residents in the fall of 2024, 76% rated the quality of transit service as good or excellent, an increase of 13% since the last community survey taken in 2017. This level of satisfaction is much higher than peer city comparisons. As a result, the FY 2026 budget continues to lay the financial foundation necessary for a zero-fare system after the current pilot project sets to expire in August of 2025. The first step, taken in FY 2025, included increasing several parking-related fees and citations, in addition to the hourly cost of parking decks and on-street meters. The combined impact is expected over time to bring in more than $2 million in new revenue annually, a significant portion of which is projected to support continuation of fare-free transit in the coming years. The next step this year is a 1% gas and electric franchise fee increase to 2% total. This will generate an estimated $1 million annually and will aid in the equipping and operation of the transit system. However, the utility tax revenue may not grow at the same rate as ongoing operational expenses, so additional sources of funding may be required in the future. The long-term commitment to fare free transit, combined with the planned construction of the new transit building, will ensure our community has one of the most robust and accessible transit systems in the country. Another key focus is addressing the housing affordability crisis, especially for low-income residents, as evidenced by substantial progress towards our Affordable Housing Action Plan. The FY 2026 budget includes an $800,000 General Fund transfer to the Affordable Housing Fund. Allocations from this fund support the Housing Trust Fund of Johnson County, CommUnity security deposit program, Healthy Homes program, landlord risk mitigation, the winter shelter, and emergent situations. This budget also allocates funds to continue support for the Shelter House Street Outreach partnership. The FY 2026 budget also helps implement the nearly $3.8 million Pathways to Removing Obstacles to Housing (PRO Housing) federal grant. Projects include a Comprehensive Plan update to promote housing choice, initiation of a housing counseling program, and an evaluation to help the Housing Authority establish a development arm. At the same time, the City will evaluate repositioning its Public Housing program to improve its financial sustainability while facilitating growth in the City’s publicly owned housing stock. The City will continue to explore the best way to support these efforts using previously generated funds for affordable housing totaling more than $7 million. These astutely created supplemental revenue streams such as fee-in-lieu payments, tax increment financing, and federal grants help further expand capacity for affordable housing investment despite tightening property tax revenues. Affordable Housing

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