FY27 Proposed Budget

over the fiscal year 2026 revised budget of $4.5 million, and there is an average increase of 0.4% over the last five years, excluding the 1% increase in the utility franchise tax.. a) Hotel Motel Tax: This revenue source is a state-administered tax. Estimated at $1,870,500 in fiscal year 2027, the seven percent (7%) tax on gross hotel/motel room rental receipts is distributed as follows:

Convention & Visitor's Bureau 25.00% Police Patrol 47.50% Parks & Recreational Facilities 27.50% Total Hotel Motel 7% Tax 100.00%

In addition, fifty percent (50%) of the hotel/motel taxes generated by the Hilton Garden Inn are transferred to the Tax Increment Financing Fund and then rebated back to the developer. This agreement started in fiscal year 2018 and will continue until fiscal year 2029. b) Utility Replacement Excise Tax: The Gas and Electric Excise tax is collected on the generation, distribution, and delivery of electricity and natural gas. This tax replaced the taxation on utility property in 1999. Cities are required to calculate property tax revenues with and without gas and electric utility property valuations. The calculated difference is required to establish the General Property Tax Equivalents which is the basis of the Iowa Department of Revenue distribution formula. c) Utility Franchise Taxes on utility customers: Senate File 478 was enacted by the Iowa state legislature during its 2009 session, establishing cities’ right to impose a franchise tax on gas and electric utilities. On July 8, 2025, the Iowa City Council passed and approved an ordinance establishing a one percent (2%) tax to be expended for the following purposes: 1) Inspecting, supervising and otherwise regulating the MidAmerican Energy Company’s gas and electric franchises. 2) Property tax relief. 3)The repair, remediation, restoration, cleanup, replacement, and improvement of existing public improvements and other publicly owned property, buildings, and facilities. 4) Projects designed to prevent or mitigate future disasters. 5) Energy conservation measures for low-income homeowners, low-income energy assistance programs, and weatherization programs. 6) Public safety, including the equipping of fire, police and emergency services, sanitation, street, and civil defense departments. 7)The establishment, construction, reconstruction, repair, equipping, remodeling, and extension of public works, public utilities, and public transportation systems. 8) The construction, reconstruction, or repair of streets, highways, bridges, sidewalks, pedestrian underpasses and overpasses, street lighting fixtures and public grounds, and the acquisition of real estate needed for such purposes.

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