FY27 Proposed Budget

Iowa City’s tax rate reflects enhanced levels of public services (e.g. full-time fire department, senior center, human rights, fare-free transit service, etc.), unique state and federal mandates (e.g. Chapter 411 public safety pension contributions), and other factors such as a significant number of University of Iowa affiliated tax-exempt properties within the jurisdiction.

Past efforts to reduce Iowa City’s property tax rate have brought our community in alignment to the rates of other cities in Eastern Iowa. When compared to the largest cities in Iowa, Iowa City has moved from one of the highest tax rates in the state to the middle of the pack. Looking ahead, future rates depend on State-level property tax reform and continued implementation of property tax relief through LOST.

Figure 8: FY 2026 Municipal Property Tax Rates in Eastern Iowa North Liberty $11.69 Coralville $14.53 Iowa City $15.63 Davenport $16.61 Cedar Rapids $16.66

General Fund Overview

The General Fund, which includes police, fire, parks and recreation, senior center, library and general government services, represents nearly one third of the total budget. General Fund operations are largely supported by property taxes, which constitute approximately 66% 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 2027 budget includes a 2.0% increase in General Fund expenditures (excluding transfers) over FY 2026, fueled mostly by non-discretionary items such as wages and employment benefits. Increasing expenditures mostly reflect higher costs for providing services at current levels, rather than increasing levels of service. However, this is somewhat mitigated by a $300,000 reduction in contingency funds which were initially built up to accommodate anticipated staffing needs for a future fire station. Instead, the City’s focus has necessarily shifted to bolstering a four-station model due to ongoing fiscal constraints.

Figure 9: General Fund Revenue Sources (FY 2027) excludes transfers

Figure 10: General Fund Expenditures (FY 2027) excludes transfers

Licenses & Permits 4% Use of Money & Property 2% Charges for Fees & Services 2% Other Financing Sources 1%

Other City Taxes 6%

Services 19%

Intergovernmental 6%

Personnel 76%

Property Taxes 66%

Contingency 1% Supplies 3% Capital Outlay 1%

Miscellaneous 13%

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