FY26 Proposed Budget

Long Range Financial Planning

Long range financial planning is conducted by the City in numerous areas of the City’s financial operations. Where long range financial plans are prepared, the applicable years of the plans are incorporated into the annual budget process and the three-year financial plan. Discussion of some of the City ’s operations and their long-range financial planning and projections is provided below.

Major Fund Financial Projections

In each major operating fund, there is a long-term financial projection included at the end of each Fund Summary. Each long-term projection is presented through the year 2030 and includes a trend analysis and a chart of revenues and expenditures. Major funds that have long-term financial projections incorporated are the General Fund, Employee Benefits Fund, Debt Service Fund, Parking Fund, Transit Fund, Wastewater Fund, Water Fund, Refuse Collection Fund, Landfill Fund, and the Stormwater Fund. The Housing Authority Fund does not include a long-term financial projection as this is entirely dependent on federal grant funding and will fluctuate for factors beyond the control of the City Council or management. One non-major fund that also incorporates a long-term financial projection is the Road Use Tax Fund. A long-term financial projection is included for the Road Use Tax Fund due to the importance of this fund’s activities to the City’s overall operation and its relevance to the General Fund and Employee Benefits Fund. On May 22, 2013, the State of Iowa legislature passed a property tax reform bill (SF295) that will have a significant impact on the City’s ability to finance services in the future. The property tax reform bill has multiple components including changes to the taxability of residential, multi residential, commercial, and industrial property. A ‘backfill’ or replacement of local property taxes with State funding was established to provide financial assistance to local governing jurisdictions affected by the property tax legislation. The City funds for which property tax is a significant funding source include the General Fund, the Debt Service Fund, the Employee Benefits Fund, the Transit Fund, the SSMID-Downtown District Fund, and the Tax Increment Financing Fund. Property tax also supports the Road Use Tax Fund, the Airport Fund, and the Metro Planning Organization of Johnson County (MPOJC) Fund through subsidy transfers from the Employee Benefits Fund and the General Fund. Impact of State property tax reform The backfill revenue received from the State of Iowa to replace property tax revenues lost due to the rollback of commercial and industrial property was $12,493,584 in total for fiscal years 2015 – 2022. The State passed additional legislation in 2021 to phase out the backfill payments to local governments. Starting in fiscal year 2023, the City’s backfill payment from the State are being reduced by 20% per year until it is fully phased out in fiscal year 2027. The backfill revenue received for fiscal year 2023 was $1,243,694 and for fiscal year 2024 was $1,674,917, which included a new backfill of $742,147 from new legislation passed in 2022. This legislation changes the rollback for all

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