Facing $1.3 million budget shortfall after failed public posting, North Liberty turns to lawmakers for help

NORTH LIBERTY — The City of North Liberty is looking to Iowa lawmakers for help after its Fiscal Year 2026 budget missed being formally approved because a public hearing notice wasn’t published in time. If it can’t correct the mistake, the city would fall $1.3 million short of its planned property tax revenue next year.

City staff explained that an email to place a public notice in The Gazette — the newspaper of record for North Liberty — was not sent prior to the city’s second public hearing on April 22.

Iowa law requires that cities post notice of a public hearing no less than 10 days before the public hearing and no more than 20 days in advance.

The city has been working with the Iowa League of Cities and state legislators to find a way to certify the budget this month. The deadline to submit an approved budget to the county auditor was April 30.

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“While this is a long shot, the legislators have been very supportive in trying to help us correct this mistake,” City Administrator Ryan Heiar wrote in a memo to city council.

If the city is not able to find a legal solution, it will be limited in the amount of tax revenue it can collect, resulting in $1.3 million less than it planned to collect. In that event, the city would work with the Iowa Department of Management to update the required paperwork to reflect last year’s budget tax rates.

“Fortunately, the City has ample reserves, and we anticipate most of this shortfall will be within the debt service fund for which there is a surplus. Nonetheless, the gravity of this mistake is substantial, and I humbly apologize for this misstep. Please know that our team is committed to learning and improving from this mistake,” Heiar wrote in a memo to the city council.

Amendment seeks to correct ‘honest mistake’

On Monday, the Iowa House Ways and Means Committee voted to adopt an amendment to House Study Bill 90, which relates to cigarette and tobacco product regulations. The amendment would allow North Liberty to certify its budget after this year’s deadline. The bill, with the amendment, is now eligible for debate in the House.

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Lawmakers on the committee said they were trying to correct an “honest mistake.”

“I don't believe there was any ill intent and I believe it was an honest mistake,” Rep. Bobby Kaufmann, R-Wilton, chair of the committee, said Monday. “So our amendment today in committee allows them to still collect those property taxes, which is the punishment for not doing a proper notification. So we as a state are giving them the exemption to proceed, acknowledging that it was just a simple mistake.”

Nick Bergus, North Liberty’s community relations director, said in the past, the Department of Management was able to be more flexible in the event a city missed a public hearing publication.

Now, there are only four exceptions, including events like a weather-related disruption to a public hearing; the newspaper receiving the notice but failing to publish it; lack of a council quorum due to an unexpected vacancy or illness; or failure of state software, none of which apply to North Liberty.

“It's a lot more constricted. And so we're certainly not the first community that this has happened to, and I'm confident we won't be the last,” Bergus said.

Initial proposed FY 26 budget

North Liberty’s proposed budget for Fiscal Year 2026, which begins July 1 and runs through June 30, 2026, was a balanced budget of $19.9 million, up $1.2 million from the current year.

The proposed property tax levy for next year is $11.87 per $1,000 of taxable valuation, up 32 cents from $11.37 in the current fiscal year. The city said the proposed rate increase is related to debt service, in part due to capital projects such as construction of a new city hall.

Additionally, water rates would increase 6 percent under the proposed budget, for the first time in four years.

Next Steps

The city is required to hold another public hearing on the budget, regardless of whether the bill and its amendment are adopted by the Iowa Legislature and signed by the governor.

The North Liberty City Council will meet Tuesday at 6 p.m. at City Hall, 360 N. Main St. The agenda includes setting a public hearing on the budget for May 27.

After notice of the public hearing has been posted and the hearing has been held, the city council can adopt the budget.

Tuesday’s meeting is open to the public, or it can be streamed online at northlibertyiowa.org, or on the city’s Facebook page.

Erin Murphy of The Gazette and Maya Marchel Hoff of the Gazette-Lee Des Moines Bureau contributed to this report

Comments: megan.woolard@thegazette.com

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