FY26 Proposed Budget

While state property tax reform strains the City’s primary revenue source, rising operational costs tied to inflation and growing service demands also create additional budgetary pressures. These factors make moving forward with cautious budgeting and strong reserves critical. Although the City benefits from a strong financial foundation, additional financial stressors such as inflationary pressures, an economic recession, new property tax reform legislation, natural disasters, or public health crises could tip the scales towards higher expenditure cuts, service level reductions, or reliance on new or expanded revenue streams.

Fiscal Year 2026 Budget Overview

The FY 2026 budgetary expenditures total $237,906,024. Of the total budget, $73,579,100 is for the General Fund and $65,940,345 is directed to Capital Projects. A breakdown of the budget by fund type is included in the chart below.

Expenditure Comparison by Fund Type (FY 2026) excludes transfers

$- $20,000,000 $40,000,000 $60,000,000 $80,000,000

General

Enterprise

Special Revenue Debt Service Capital Projects

FY2026 $73,579,100

$66,683,229

$17,312,450

$14,390,900

$65,940,345

Property taxes and charges for services account for a majority of City revenues. The following table shows year-over-year change in Iowa City's revenue across all funds. The 2.7% increase in property taxes is the result of the State increasing the residential property tax rollback percentage and growth in the property tax base. The 11.6% growth in other City taxes is primarily due to the proposed increase of 1% in the utility franchise tax. Most other revenue categories include slight increases, apart from intergovernmental and other financial sources. However, larger swings are not atypical in those two categories as they are influenced by the timing of state and federal grants and debt sales.

All Funds Revenue Comparison of FY2025 versus FY2026 FY2025 Revised

FY2026 Budget

Percent Change

Property Taxes Other City Taxes Licenses & Permits Use of Money & Prop Intergovernmental Charges for Services

$ $ $ $ $ $ $ $

68,821,500 7,964,400 2,592,880 3,292,385 57,011,305 47,411,737 11,772,761 50,296,475

$ $ $ $ $ $ $ $

70,655,600 8,891,100 2,652,800 3,370,300 55,219,942 49,225,400 11,985,400 14,516,000

2.7%

11.6% 2.3% 2.4% -3.1% 3.8% 1.8% -71.1%

Misc.

Other Financial Sources

Total

$

249,163,443

$

216,516,542

-13.1%

The pie chart below displays revenue across all funds for the Fiscal Year 2026 budget. It demonstrates the reliance on property taxes and charges for services to support operations.

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