FY26 Proposed Budget

backfilled through use of funds in the City’s Black Lives Matter account, which has a current balance of over $620,000. In addition, this budget maintains the vast majority of external organization support at a flat level, including the Aid to Agency social service grant program ($770,000), which is the same amount as FY 2025 but still marks an increase of nearly 97% over funds provided in FY 2019. No new arts and culture partner funding commitments are recommended and existing fundings levels are also held flat. Small reductions in spending lines that support public art, historic preservation grants, housing rehabilitation, and economic development programs are included in this budget. Staff projects an increasingly difficult budget environment through FY 2029. If expenditures are not curtailed and addressed gradually, more drastic and impactful reductions may be required in the forthcoming fiscal years.

Budget Impacts and Financial Goals

Financial Goals

This budget was developed within the context of several significant financial impacts discussed previously:  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 $308,710 in FY 2026 before being fully eliminated in FY 2027.  The elimination of the Emergency and Library levies and additional growth restrictions on municipal budgets due to the 2023 State of Iowa property tax reform legislation. The two levies totaled $0.47 per $1,000 of taxable property valuation and will be manditoraly phased out of the combined General Fund levy by FY 2029. Previously, these levies generated approximately $2 million annually to suport Library and Climate Action programs. 

Ensure reliability of core services and infrastructure remains high while balancing cost impacts on residents and businesses.

Seek fiscal and operational stability levels despite

compounding financial pressures due to state property tax reform and escalating costs of operations. Continue to dedicate resources towards advancing City Council’s Strategic Plan priorities and adopted Master Plans.

The continuation of a historically low residential rollback rate, following the sharp drop of 8.3% in FY 2025 which was the single largest drop since the late 1970s. The impact is particularly significant for Iowa City as multi-family properties are now classified as residential due to the 2013 property tax reform law.  Economic inflation, higher costs for goods and services, sky-rocketing property and liability insurance costs, and ongoing financial impacts caused by the pandemic and associated economic recovery. In light of these impacts, budget preparation was guided by three financial goals that seek to establish a sound fiscal strategy for the next year and beyond. The budget prioritizes maintenance of core service levels in light of heightened financial challenges. It accomplishes this through mild utility rate and fee increases to help address acute needs in core service areas while maintaining a stable property tax rate. This budget responds to the 2013 and 2023 State of Iowa property tax reform laws while also confronting macro-economic impacts, such as higher inflation for service

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