FY27 Proposed Budget

In FY 2024 the City drew down General Fund reserves by approximately $4.5 million to support a strategic land purchase in Downtown Iowa City. That acquisition is expected to be short-term as the City is pursuing a public/private partnership that will build taxable value on the site. Similarly, FY 2024 and FY 2025 drew down reserves from the Facility Reserve to support planned projects, most notably the reconstruction of City Park Pool. Another $4.5 million is currently planned to support property acquisition and design for a future Police station. These reserve drawdowns will take the General Fund unassigned fund balance to 33% in FY 2027. While this is within the City’s policy of maintaining a reserve balance between 25 to 35%, continual monitoring is required given the financial headwinds previously outlined. 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 related to the operation. The budgeted revenues, expenditures, and corresponding fund balances of the City’s enterprise funds are detailed in the following table. Each of the City's enterprise funds are in varying, yet stable conditions. The final column indicates the approximate health of each fund (AAA = Good, AA = Adequate, A = Needs Monitoring). Enterprise / Business Fund Overview

Figure 11: Enterprise Fund Overview

Estimated Fund Balance 6/30/26

Unassigned Fund

Unassigned Balance as % of Rev & Trans In

Restricted, Committed, Assigned

Estimated Revenues

Transfers In

Budgeted Expenditures

Transfers Out

Fund

Balance, 6/30/2026

Fund Health

Parking

7,071,700

1,500,000

5,517,200

3,074,200

3,524,924

1,093,236

2,431,688

28%

A

Transit

10,385,552 6,479,300

16,743,400

775,000

3,272,108

1,353,495

1,918,613

11%

A

Wastewater 14,152,900 3,738,200

11,537,300

5,572,200 19,567,059

3,470,265

16,096,794

90%

A

Water

13,264,400 3,032,000

10,517,000

6,000,000 10,863,592

1,710,843

9,152,750

56%

AA

Refuse

5,297,300

57,000

5,096,700

497,500

3,490,540

-

3,490,540

65%

AA

Landfill

7,989,100

1,450,200

6,849,800

2,439,300 28,223,592 25,209,612

3,013,980

32%

AA

Airport

468,900

200,000

449,000

200,000

244,449

182,399

62,051

9%

A

Stormwater

1,954,400

1,114,000

856,100

1,520,000

2,321,009

1,026,754

1,294,255

42%

AA

ICHA

14,087,300

170,400

14,431,036

35,000

6,644,249

876,881

5,767,368

40%

AA

Although some funds present stable or adequate positions, proactive, incremental increases to rates are prudent to avoid larger hikes when the fund is in a more critical condition. In response to pressures on specific Enterprise Funds, this budget adopts a two rate and fee increases:

 3% water rate increase (approximately +$1.16/mo. per household)  5% sewer rate increase (approximately +$1.93/mo. per household)

The impacts of these increased fees on households are somewhat mitigated by the property tax rate reduction, as well as by programs specifically designed to aid households with lower incomes, namely the City’s low-income utility program which is funded primarily through the General Fund.

27