Cedar Rapids council adopts $866 million fiscal 2026 budget, approves first readings of related rate ordinances

Cedar Rapids Mayor Pro Tem Anne Poe and the City Council adopted an $866 million all-funds budget for fiscal year 2026 on April 22, approving related municipal-code amendments and first readings of utility-rate ordinances and also approving a FY2025 budget amendment.

The budget, presented by Finance Director Abi Deshpande and utilities director Roy Hessman, totals $866,000,000, a roughly 2% increase over the FY2025 adopted budget. Deshpande told the council the capital program accounts for the largest share of spending at about 42% (roughly $336 million), personnel services about 21% (approximately $185 million), and discretionary spending about 16% (about $141 million).

Deshpande said the budget responds to rising employee benefit and health care costs (noting a $9 million combined increase for wages and benefits and a roughly $3.2 million increase in health costs), higher property and vehicle insurance costs, and increased debt-service related to a large water pollution control improvement project. She said the budget is balanced with revenues and reflects a proposed 19-cent net increase in the city property-tax levy driven by flood-control-related levies even as other levies were reduced to partially offset the change.

The budget presentation explained that taxable valuation rose about 4.8% year-over-year to about $7.8 billion (the FY2026 100% assessed valuation was presented as about $15.8 billion), but that state rollback rules and expanded exemptions limit the city’s ability to capture all valuation growth. Deshpande highlighted revenue pressures in FY2026, including an estimated $5.8 million net revenue loss driven by changes in state law and other factors, and singled out a roughly $2.1 million reduction tied to changes in automated traffic-enforcement regulations.

Hessman summarized utility-rate changes included in the budget package. The council heard staff recommend utility rate increases for both FY2026 and FY2027 (a two-year rate plan): overall increases for a typical residential customer of about 5.9% in FY2026 and about 5.8% in FY2027. Specific proposals included a roughly 9% increase to sewer daily service and volumetric charges (with industrial BOD rates rising about 6% and other sewer charges 9%); a 5% increase to water daily service and volumetric steps 1–3 (step 4 would rise 2%); and a 3.5% increase for solid waste and recycling to support an upcoming variable cart-size program.

Council and staff also described other budget actions: program-specific one-time transfers and temporary reductions in some general-fund transfers (for example, a $125,000 transfer removed for visual arts and a $500,000 reduction for neighborhood finance corporation transfers), and temporary freezes of several vacant positions totaling 6.38 FTEs. Deshpande said some department-level discretionary spending and capital-equipment purchases were reduced to balance the general fund.

Why it matters: The FY2026 plan maintains a large capital program (including water-pollution-control and flood-control projects), passes on utility rate increases to customers, and adjusts property-tax levies to continue funding city flood-control obligations while attempting to limit operational levy growth. The package also includes a FY2025 amendment to recognize timing differences for capital projects and American Rescue Plan Act uses.

Votes at a glance

- FY2026 All-Funds Budget adoption (Item 1): motion to adopt moved by Council member Scott Olson, seconded by Council member Todd; motion carried (vote recorded as "ayes, motion carries" in the public record). This action adopted the $866,000,000 all-funds budget as presented by staff.

- Ordinance amendments and first readings (Items 2–6): council approved first readings or initial adoption votes for the following municipal-code amendments and rate ordinances during the same meeting (no roll-call tallies provided in the minutes): - Item 2: Amend Chapter 12 (Water Service) — approval of ordinance on first reading moved by Council member Todd, seconded by Council member Van Orny; motion carries. - Item 3: Amend Chapter 13 (Wastewater Facilities, code changes) — approval of ordinance on first reading moved by Council member Van Orny, seconded by Council member Poe; motion carries. - Item 4: Amend Chapter 24 (Zoning/related code) — approval of ordinance on first reading moved by Council member Poe, seconded by Council member Overland; motion carries. - Item 5: Amend Chapter 12 to repeal existing water rates and set new rates for FY2027 (first-reading action) — moved by Council member Overland, seconded by Council member Tyler Olson; motion carries. - Item 6: Amend Chapter 13 to repeal existing wastewater rates and set new rates for FY2027 (first-reading action) — moved by Council member Tyler Olson, seconded by Council member Hager; motion carries.

- FY2025 budget amendment (separate hearing): council adopted an amendment to the FY2025 budget to reflect updated revenues, expenses and transfers tied to timing of capital projects and ARPA uses (Item: FY2025 amendment). Motion to adopt moved by Council member Hager, seconded by Council member Meyer; motion carries.

Discussion and next steps: Staff will return ordinance amendments for second and third readings as required. Deshpande said detailed project pages and departmental budgets support the adopted totals; staff also flagged that some supplemental amendments to FY2025 will be returned to council for additional action in May. The utility-rate ordinances advanced on first reading will return for further readings before final adoption.

Ending: The council’s action preserves the city’s large capital program while adjusting operating fund plans to address rising costs and revenue pressures; the FY2026 budget package sets the spending and rate trajectory that staff must implement and report on during the fiscal year.