FY27 Proposed Budget

Debt Service

Staff is projecting General Obligation (G.O.) bond issues of $23.3 million in 2026 and $17.5 million in 2027. The use of G.O. bonds is required to carry out the planned capital projects. This level of bonding projected is well below the thresholds established by the State and is consistent with Iowa City’s debt policies. Figure 14 provides an overview of debt obligations.

Figure 14: General Bonded Debt Outstanding and Percent of Total Valuation

0 10 20 30 40 50 60 70 80 90 Millions of Dollars ($)

1.40%

1.20%

1.00%

0.80%

0.60%

0.40%

0.20%

FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 *FY26 *FY27 *FY28 Debt (millions) 67 67 67 68 67 66 64 63 66 69 71 77 % of Val 1.25% 1.22% 1.14% 1.11% 0.97% 0.94% 0.88% 0.85% 0.76% 0.79% 0.74% 0.79% 0.00%

* Projected

The State of Iowa limits city debt to no more than 5% of the total assessed value of taxable property within the corporate limits as established by the City Assessor. The City Council’s Debt Management policy follows best practices for Aaa rated communities and aims to limit outstanding general obligation and tax increment revenue bonded debt to no more than 0.75% of total assessed property valuations. The budget anticipates outstanding debt of $71.3 million at FY 2027 year-end, which is approximately 0.74% of total valuations and equal to roughly 14.8% of the allowable debt level established by the State. Iowa City's internal fiscal policy also specifies that the debt service levy shall not exceed 30% of the total property tax levy. The debt service levy in the FY 2027 budget decreases $0.117 from the prior year due to property tax relief provided by LOST and accounts for approximately 16.5% of the City’s total levy.

Internal Service Fund Highlights

Internal Service Funds serve needs that are internal to the City as an organization. These are non-budgetary funds and are an internal financing mechanism for operations such as vehicle replacement and information technology services. Expenditures made from these funds are charged back to departments. All funds are in good condition with healthy balances. Strong balances create reserves that can provide flexibility to deal with unexpected operational costs.

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