FY26 Proposed Budget

General Fund Overview

General Fund Revenue Sources (FY 2026) excludes transfers

The General Fund, which includes services such as police, fire, parks and recreation, library and general government, represents nearly one third of the total budget. General Fund operations are largely supported by property taxes, which constitute approximately 65% of the fund’s total revenue. Prioritizing General Fund expenditures is crucial considering annual salary and benefit growth (3-5% annually), rising supply and material costs, and increased service demands due to a growing population. The FY 2026 budget includes a 3.5% increase in General Fund expenditures (excluding transfers) over FY 2025, fueled mostly by non-discretionary items such as wages, employment benefits and necessary insurance costs. This budget also increases personnel expenditures by 3.8%. Heightened expenditures mostly reflect higher costs for providing services at current levels, rather

Licenses & Permits 4% Use of Money & Property 2%

Other City Taxes 7%

Intergovernmental 6%

Property Taxes 65%

Charges for Fees & Services 2% Other Financing Sources 1%

Miscellaneous 13%

General Fund Expenditures by Category (FY 2026) excludes transfers

Services 19%

Contingency 1%

Personnel 75%

Supplies 3%

Capital Outlay 2%

than increasing levels of service. However, this is balanced by a 27.0% reduction in contingency funds. Over the past few years, the contingency was built up to accommodate anticipated staffing needs for a future fire station. However, financial uncertainty has made opening a new station impractical. In FY 2024 the City drew down General Fund reserves by approximately $4.5 million to support a land purchase in Downtown Iowa City. That acquisition is expected to be short-term as the City will look to lead on a public/private partnership that will build taxable value on the site. Similarly, fiscal years 2024 and 2025 drew down reserve from the Facility Reserve to support planned projects including the equipment building and reconstruction of City Park Pool. The planned reserve draw down will take the General Fund unassigned fund balance from the 42% level in FY 2023 to 34% in FY 2026. While this number is towards the upper end of the City’s policy of maintaining a balance between 25-35%, a close eye will need to be kept on this number in the future given the financial headwinds previously outlined.

Enterprise / Business Fund Overview

Enterprise or Business Funds refer to specific operations intended to be self-sustaining without the need for subsidy from property taxes or revenue sources other than fee collection directly

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