Des Moines finance staff and consultants warn revenues won’t keep pace with rising costs; square-footage tax collections lag

Des Moines finance officials reported mixed second-quarter results and warned the council that long-term structural shortfalls are likely unless the city adopts new revenue measures or cuts spending.

Finance Director Jeff Friend told the City Council the new square-footage business-and-occupation (B&O) tax, adopted by the council in December and administered through the FileLocal portal, produced about $30,000 in first-quarter collections when the new form was not yet available and about $73,000 in second-quarter collections after the form update. The city’s 2025 budget assumed roughly $840,000 in square-footage tax revenue for the year; collections so far are well below that figure, Friend said. He also reported that delinquent B&O filers are being pursued and that the city is considering an audit vendor to increase collections.

Friend said general fund revenues were about 4% under budget through the first six months of 2025, leaving an ending operating cash balance of roughly $2.1 million, or 8.2% of annual operating expenses, compared with the city policy minimum of about 16.7%. That equates to roughly one month of…