Des Moines presents 2026 budget that leans on reserves, tighter staffing and higher fees

Des Moines city staff on Thursday presented a recommended 2026 budget that relies on a mix of one-time reserves, fund transfers and program cuts to close an estimated roughly $17 million shortfall while signaling a new, tighter posture for future budgets. City Manager Scott Sanders said the city is responding to changes in how property-tax growth is applied and that “property taxes are now limited on growth,” which reduces how much new valuation produces operating revenue.

Sanders and finance staff said the recommended package uses about $2.8 million of the general fund balance this year, repurposes other fund balances and shifts some costs to the local-option sales tax; it also counts on savings from vacancies and attrition, and includes 14–15 position eliminations and two layoffs already implemented. Sanders told council members the administration will bring a separate resolution to raise the city’s minimum general fund balance from the long-standing 15% to 20% so the new floor is transparent and enforceable.

The nut of the plan is to protect core service levels while shrinking the size of city government to match slower growth in operating revenue. Sanders said the city captured only about 1.1% operating growth across three cycles because state rules trim how much of valuation growth the city may keep; he explained that a 2.75% valuation increase now yields only 1.75% retained for operating levies, and higher brackets reduce retention further. That structural pressure, Sanders said, “requires that we have smaller local government.”

City staff described four levers used to close the gap: one-time use of fund balance, staffing reductions (mainly by attrition), contract and operating cuts, and revenue changes including modest fee increases. Among revenue changes noted in the presentation was a planned parking ticket increase from $15 to $20. Staff also said some general fund positions traditionally supported by property tax will be funded in part from sales tax revenue going forward, especially public safety personnel.

Council members asked for extra transparency on several line items, including a breakdown of contracted services and the city’s vehicle and facilities maintenance costs. Several members also pressed administration to provide multi-year forecasts showing how this one-time use of reserves and the proposed 2026 choices will affect the city’s fiscal position in subsequent years. Sanders responded that the administration will show a multi-year glide path that reduces the one-time use of reserves by about $1 million per year to avoid recurring structural holes.

Ending: Council members asked staff to return with more granular contract and travel-line detail, a clearer multi-year projection showing repayment of any one-time fixes, and a standalone resolution to establish and publicize the new 20% minimum general fund balance floor. The council scheduled additional workshops and public budget meetings before final adoption in April.