Iowa City tax rate unchanged, but utility fees set to rise

IOWA CITY — The Iowa City Council this week narrowly adopted the city’s 2026 fiscal budget, with three of the seven council members dissenting after a failed motion to reduce planned spending for the police department.

Iowa City’s general fund budget will increase about $2.4 million, from $71.1 million to $73.5 million, for the budget year that begins July 1. City official say they will have to dip into reserves — which stand at $26.8 million — to cover a shortfall of $2.8 million.

The city’s property tax levy remains unchanged from the current year, at $15.633 per $1,000 of taxable valuation.

The budget resolution pass 4-3, with council members Laura Bergus, Oliver Weilein and Mazahir Salih dissenting.

City Manager Geoff Fruin said the city is facing a loss in property tax revenue following changes at the state level as legislators have overhauled Iowa’s property tax system.

After state lawmakers made historical reforms to property taxes in 2013, they agreed to “backfill” much of the lost local tax revenue with state money. But lawmakers later voted to phase out that backfill — leaving local governments to cope. Fruin said in the past, the backfill provided about $1.5 million annually to the city. But next fiscal year, the city is expecting to receive about $308,000, he said.

Bergus leads charge to reduce police spending

Bergus made a motion to reduce the “Police Department/Crime Prevention” budget line item from about $17.5 million to about $16.6 million — the budget for the current fiscal year. The motion ultimately failed with members Josh Moe, Megan Alter, Shawn Harmsen and Mayor Bruce Teague opposed.

Bergus’s rationale was that police department has not spent its entire budget in the past two fiscal years. Any money left unspent at the end of a fiscal year returns to the general fund. Now would be the right time, Bergus said, to decrease spending when city staff have said they anticipate the next few budget years to be challenging.

“All I'm asking for us to do is turn down this spigot so that the money can flow elsewhere, so that the money can flow to our priorities, social justice and racial equity, to affordable housing, to human rights at a time that they're being stripped away from our residents,” Bergus said at the meeting

Bergus previously has advocated for decreases in police spending and has advocated for abolishing police in Iowa City.

Council members that opposed the motion said the city already has a small police force relative to the size of the city, and that the city still can contribute to other public safety and mental health initiatives.

Utility and fee rate changes approved

As part of the budget, water rates are set to increase 3 percent, which amounts to an increase of $1.12 per month for the average household that uses 800 cubic feet of water. The money will be used to fund general operations.

Additionally, a 1 percent gas and electric franchise free was approved, estimated to provide the city with an additional $1 million each year to support fare-free transit.

The city launched a two-year fare-free pilot program in August 2023 to encourage people to use public transit and to meet the city’s climate action goals. The pilot program, set to end later this year, now is funded through federal pandemic relief aid.

Also approved was a $2 sticker fee for additional bags of yard waste outside compost bins. A $5 minimum charge will be assessed for yard waste deposited at the city landfill. The city’s leaf vacuum will remain available to residents for no charge.

Comments: megan.woolard@thegazette.com

Get a weekly roundup of Johnson County news by signing up for my Johnson County Update newsletter.