Initial Iowa City budget better than expected

City staff released Wednesday their proposed budget for the upcoming fiscal year, and it offered a rosier outlook than was expected earlier this year.

The success of a building project that received help from the city has put more money in the general fund, which has helped erase the estimated $700,000 in cuts that were expected to be made to the budget for the year that begins July 1.

“I think we're in much better shape that I anticipated we would be just a few months ago,” interim City Manager Dale Helling said.

The proposed budget calls for a tax levy of $17.83 per $1,000 of taxable value, down from $17.85 this year.

Homeowners would pay more in taxes, however, because of an increase in the percentage of a residential property's value that is subject to taxation. That number, which is known as the rollback and is set by the state, will jump from 45.59 percent this fiscal year to 46.91 percent next year.

At the proposed tax rate, the owners of a $100,000 home would pay $836.33 on the Iowa City portion of their tax bill, up from $813.89 this year.

The City Council will have the final say on the budget and will start discussing it next month.

Overall, the proposal calls for a general fund budget of $58.1 million, down from $63.5 million this year. The budget is mostly unchanged, though, minus a few million dollars spent this year on some one-time projects, Finance Director Kevin O'Malley said.

One notable exception to the status quo is the proposed addition of nine firefighters to staff a new fire station. It also has six new police officers. The council recently approved a 2 percent franchise fee on natural gas and electric services to help pay for the positions.

The city also is receiving a boost from the better-than-expected performance of a tax increment financing district downtown that includes Plaza Towers, a mixed-use high-rise building. It has added an extra $1.2 million to the city's general fund.

“That, I think, was the saving grace for us,” O'Malley said.

Mayor Regenia Bailey said it showed that such tax breaks, which sometimes are controversial, can be good for the city.

Helling warned that while the city would continue to see the franchise fee and TIF money in future years, it would no longer be new money. With the recession affecting property valuations and interest income, he expects tight budgets for the foreseeable future, meaning it will be difficult to expand and sustain services.