Master Proposed Book FY2023

To the Honorable Mayor and City Council Members, It is my pleasure to submit Iowa City's operating and capital budget for Fiscal Year 2023. Although Iowa Code only requires formal adoption of an annual budget, we have included a three-year financial plan (FY 2022-2024) and five-year Capital Improvement Program (2022-2026) for planning purposes. The budget is one of the most important documents the City prepares because it identifies the services to be provided and the mechanisms to finance those services. City Council’s Strategic Plan, various City Master Plans, and input from the community informed the development of this budget. Thus, this document aims to provide resources to further strategic priorities, implement master plans, and continue Iowa City's tradition of providing a balanced budget while strengthening core municipal services that our residents value. The budget also contains prudent contingency line items and reserve levels which enable the City to maintain service levels in the event of unexpected expenditures or revenue shortfalls. Any future modifications of this budget will be fully disclosed to the City Council and general public through formal City Council actions at public meetings, in accordance with State of Iowa law. Throughout the budget compilation process, allocating funding for priorities was balanced with recognition that the financial impacts of the pandemic continue, taxable property values have plateaued, and significant financial pressures associated with state property tax reforms will be felt in the coming fiscal years. While we remain confident in the City’s financial foundation, the recommended budget keeps expenditure growth to a minimum due to these broader pressures. This budget recommends a modest addition of 3.74 full-time equivalent (FTE) positions: • Position expansion: +0.37 FTE Communications Creative Assistant • Position expansion: +0.37 FTE Community Development Program Assistant • New position: 1.00 FTE Traffic Engineering Electrician • New position: 1.00 FTE Transportation Services Program Assistant • New position: 1.00 FTE Refuse Maintenance Worker I Additionally, this budget includes funding for a comprehensive Compensation Study to evaluate the competitiveness of City pay scales which will help the City attract and retain top talent. Overall, despite anticipated property tax revenue challenges, this budget still manages to accomplish significant investments in City Council’s strategic priorities. In recent years, strong taxable growth and good financial management has enabled major investments including converting several temporary positions to permanent, more than doubling funding for both the Aid to Agencies and Social Justice and Racial Equity Grant programs, raising the City’s minimum wage to $15 an hour, contributing $1 million annually to the Affordable Housing Fund, and setting aside $1 million to address systemic racism and the Black Lives Matter movement. However, the current economic climate and the final years of property tax reform place limits on flexibility to pursue such bold investments over the next several fiscal years. This budget demonstrates a balanced approach of fiscal prudence with continued commitment to major priorities including aggressive climate action, long-term affordable housing, support for social services and an increase to the Aid to Agencies program, resources to support public safety

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