Proposed Iowa City budget calls for drop in tax rate as tax base grows

IOWA CITY - Iowa City officials are proposing a city budget for fiscal 2018-19 that would be $5.5 million less than what they're spending this fiscal year.

The proposed budget, released Friday, reflects a 3 percent decrease in revenue - from $168.6 million this fiscal year to $163.4 million next year - though income from property taxes is projected to increase by nearly 5 percent.

The budget projects expenses of $166.9 million, compared to this fiscal year's $172.4 million.

About $58 million of those expenses come in the general fund, with about $28.2 million going to capital projects.

The city expects to take in about $59 million in property taxes - about $2.6 million more than this fiscal year, for a 4.7 percent increase.

That doesn't necessarily mean property tax bills are going up, said Dennis Bockenstedt, the city's finance director.

That's because the city's overall tax base has grown 5.7 percent, primarily because of new construction or because of properties being assessed at a higher value, Bockenstedt said.

The proposed tax rate for the new budget would be $16.18 per $1,000 valuation, down 15 cents from this year's $16.33 per $1,000 assessed valuation.

'Despite the continued efforts to reduce Iowa City's property tax rate, our community still is on the higher side of cities in Eastern Iowa,” City Manager Geoff Fruin said in the budget document. 'Iowa City's higher rate reflects enhanced levels of public services and other factors, such as a significant number of University of Iowa-affiliated, tax-exempt properties within the jurisdiction.”

Also on the revenue side, the city expects a decrease in federal grants for bus replacements and a decrease in savings in the sale of debt for capital projects.

The general fund, which includes the operational and personnel costs of police, fire, parks and other city departments, makes up a third of the proposed budget, with most of its revenue coming from property taxes.

Personnel expenses are expected to increase 3.2 percent.

'Rising salary and benefit costs increased expenses for supplies and materials, and increased service demands that result from a growing population, make prioritizing general fund expenditures crucial,” Fruin said.

The $28.2 million capital budget includes funds for the Climate Action and Adaptation Plan, Pedestrian Mall rehabilitation and Riverfront Crossings Park development. Other projects include bus shelter replacements and expansion, a First Avenue water main replacement, Highway 1 Trail extension and road work.

Residents are invited to attend the two City Council work sessions on the proposed budget:

' Saturday, Jan. 6: 8 a.m. to 5 p.m., City Hall

' Tuesday, Jan. 9: 1 to 7 p.m., City Hall