Des Moines launches long-range financial review as city warns revenues are tight

Des Moines City staff told council candidates on Friday that the city’s general fund faces sustained pressure and that officials are beginning a long-range financial plan and a development-impact analysis to clarify the fiscal effects of future land-use and policy choices.

The presentation, delivered by the city manager, laid out why officials say the city must look beyond traditional revenues: property tax and sales tax returns to the city are a small share of local tax bills and are constrained by state limits.

The overview and context: Des Moines is largely residential and has a high share of tax-exempt property, officials said, which limits the tax base that supports core services. “About 8.3% of your property tax comes to the city,” the city manager said during the presentation. Using a concrete example presented to the candidates, the manager said that if a home were worth $730,000, roughly $623 of that owner’s annual property tax payment would go to the city. The manager added that the state places caps on annual property tax increases and that, for sales tax, the city receives “a little less than a penny” on each dollar of retail purchases in the city.

Why it matters: The general fund pays most day-to-day services — public safety, parks and recreation and many public works functions — and staff described fund balance levels as compliant with policy but “much lower than what I think it should be.” To give councilors better information for land-use decisions, staff will produce a development-impact analysis tool so councilors can see how different uses (residential vs. commercial) affect revenues and service costs.

What staff said they will do: The city manager said the work will include two parallel efforts — a long-range financial plan to forecast revenues and expenditures, and a development-impact analysis to estimate the fiscal effects of proposed land uses. “It’s gonna be pretty sobering, but I think it’s gonna be really important for that transparency,” the city manager said of the long-range plan. Staff indicated these projects are starting now and will feed future budget and policy discussions.

Details and context offered in the meeting: Staff said the city operates on a biannual budgeting calendar (the current approved budget covers 2025–2026) and that more substantive budget authoring for 2027–2028 will begin midway through the next year. Staff also described special revenue and enterprise funds, noting that some fees and enterprise revenues are legally restricted to particular uses and cannot be redirected to the general fund.

Actions and next steps: Staff identified the long-range financial plan and the development-impact analysis as active projects being kicked off by the city; no formal vote was taken at the session. City staff said they will bring clearer, more accessible quarterly financial reports to the council starting in June and will provide more outreach to involve the public in budget discussions.

Ending: City staff asked candidates and council members to route questions through the city manager so information can be shared equally. The city manager said staff will publish the studies and share the findings with councilors and the public as the work progresses.