FY26 Proposed Budget

discretionary value-add projects are beginning to require new revenue streams for sustainability. The clearest example of this is our fare-free transit program, which cannot be maintained without the gas and electric franchise fee called for in this budget. The City Council and public should expect that similar approaches will be needed to execute larger discretionary spending desires or new service level initiatives. Capital investments outlined in this budget continue to largely focus on addressing critical infrastructure maintenance. As we look ahead, infrastructure expenses are rapidly outpacing growth in user fees and road use tax receipts. This means that a higher burden is falling to property taxes. The City will need to adapt accordingly in order to avoid falling behind on the progress we made over the last decade in addressing deferred maintenance with our streets, utilities, and parks. Adapting may mean increased borrowing or exploration of new funding sources to relieve property taxpayers, including a local option sales tax. This budget document reflects Iowa City’s focus on providing high quality municipal services in a fiscally responsible manner. It was crafted with guidance provided by the City Council through the recently updated 2023-2028 Strategic Plan and various adopted master plans. Although the City’s financial condition is stable, property tax reforms and the current economic environment pose serious challenges and financial prudence is undoubtedly necessary to protect our financial standing and ability to deliver core services, especially as the challenges are expected to compound in the next few years. Overall, it is wise to make incremental changes now rather than dramatic changes in a few years. A strong financial foundation takes years to build, and Iowa City is fortunate to have such stability. However, that position can be compromised in a very short period of time without careful stewardship and restraint. In conclusion, I would be remiss if I did not acknowledge the efforts of our department directors, management team, and staff in submitting thoughtful and responsible spending plans for the coming year. I would like to specifically recognize the efforts of the Finance Department, led by Director Nicole Davies. Additionally, I would like to recognize the hard work and analysis of Assistant Finance Director Jacklyn Fleagle, Budget Management Analyst Angie Ogden, and Risk Management and Finance Assistant, Michelle Cook. Appreciation also is directed to Deputy City Manager Chris O’Brien and Assistant City Manager Kirk Lehmann who are central to the budget review team. The individuals noted above worked diligently as a team to pull this budget together and I am proud of the work they have performed to present you with this fiscally responsible budget. Conclusion and Acknowledgements

Sincerely,

Geoff Fruin City Manager

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