Final FY25 Adopted Budget

and economic vibrancy that helps define Iowa City. However, population growth has a profound effect on service delivery, land use, and housing affordability. Growth creates additional service demands and stresses transportation and utility infrastructure. All of these challenges must be acknowledged and managed for Iowa City to retain its attractiveness and competitiveness. Prior to the pandemic, strong growth in our tax base allowed the City to absorb the necessary expenditure increases that accompany population growth and devote significant resources to new programs while weathering the implementation of the State of Iowa’s 2013 ten-year property tax reform legislation. However, Fiscal Years 2023 and 2024 saw the City’s tax base shrink due to both a plateau in development activity and large valuation rollbacks mandated by the 2013 state property tax reform law that reduced the taxable percentage of multi-residential properties. Additionally, about $1.5 million in annual backfill payments the State previously made to the City to compensate for lost commercial and industrial property tax revenue is now being phased out and is estimated to be approximately only $617,000 in Fiscal Year 2025. This will decrease to $308,000 in Fiscal Year 2026 until it is eliminated in Fiscal Year 2027. While state property tax reform has strained the City’s primary revenue source, rising operational costs tied to inflation and growing service demands have created additional budgetary pressures over the last two years. These factors make moving forward with cautious budgeting and strong reserves critical. Although the City benefits from a strong financial foundation, any additional financial stressors such as lingering inflation pressures, an economic recession, new property tax reform legislation, natural disasters, or public health crises could tip the scales towards higher expenditure cuts, service level reductions, or necessary rate increases. Fiscal Year 2025 Budget Overview The Fiscal Year 2025 budgetary expenditures total $241,809,952. Of the total budget, $71,132,899 is for the General Fund and $76,118,294 is directed to Capital Projects. A breakdown of the budget by fund type follows:

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