Cedar Falls committee sets $12.50 proposed maximum levy, schedules April 7 hearing

The City of Cedar Falls Committee of the Whole on Monday recommended that City Council set a proposed maximum property tax levy of $12.50 per $1,000 of assessed value for fiscal year 2026 and scheduled a special public hearing for April 7 at 5:15 p.m.

Finance staff member Jennifer Odenbeck, who presented the budget background and the proposed rate, said the $12.50 figure reflects personnel and benefit cost increases and capital spending included in the draft budget but emphasized the figure is the maximum and “we can always go down. It's the top. It can always go down.”

The discussion centered on how recent state legislation, House File 718, and changes to rollback and backfill rules affect Cedar Falls’ revenue and how the new mandatory taxpayer notice may overstate the typical homeowner’s tax increase. Odenbeck told the committee the city’s current tax rate is $11.86; a $12.50 levy represents a 64-cent increase. Using a $100,000 home as an example, she said the budgeted rate would raise annual city taxes by about $43, or 7.87 percent, but the state-mandated mailing — which assumes a 10 percent rise in property valuation for the notice — will show a larger percentage change to taxpayers.

Odenbeck outlined the main drivers and constraints shaping the proposed levy: valuations, state-set rollback factors and state backfill policy, and the tax rate set by the council. She said assessed valuation in the city rose by about $46 million, or 1 percent, and that residential rollback for FY2026 is projected at 47 percent while commercial/industrial rollback remains at 90 percent. She described a phased reduction in state backfill that previously reimbursed cities when rollback changed — Cedar Falls previously received about $600,000 but expects roughly $328,000 for FY2026 and is losing about $82,000 per year as the phase-out continues.

Odenbeck also listed budget inclusions and exclusions: salary increases tied to union agreements and a market adjustment, a 14 percent recommended increase in health-insurance contributions per the city's consultant, IPERS employer contribution at 9.44 percent, and no new staff positions in the proposed budget. She said the city included certain capital items in the FY2026 column of the five-year capital-improvement plan (CIP), including $225,000 from the general fund toward the high-school pool and a $500,000 council-designated capital allocation discussed at goal-setting.

Other revenue and expense notes in the presentation included a projected hotel–motel tax of $1.4 million for FY2026 (up from $1.2 million budgeted for FY2025); the city plans to apply $200,000 of an unexpectedly higher FY2025 hotel–motel estimate to a project so it will levy only $300,000 for that purpose in FY2026. Emergency management agency (EMA) costs were estimated to increase by less than 1 percent; the city received a $184,000 refund for FY2024 and plans to apply half ($92,000) to FY2026 to moderate the levy, a sum Odenbeck said would reduce the rate by roughly 4 cents.

Odenbeck said the city did not budget a 3 percent request from Met Transit and noted uncertainty about how long the state will continue backfilling the commercial tax-credit change enacted in 2023. She warned that the state-required March 20 mailing will assume a 10 percent valuation increase for taxpayers and therefore could overstate apparent tax increases in communities, including Cedar Falls, that did not have a countywide reassessment.

Mayor (unnamed) said he plans to bring a lower recommended budget to the next committee meeting and that the February action sets the legal maximum to be included in the county notices. After a motion to set the proposed levy at $12.50 and to hold the special public hearing on April 7 at 5:15 p.m., the committee approved the motion by voice vote. The mayor said the regular City Council meeting will convene at 7 p.m., with a final budget hearing scheduled for April 21 and the statutory adoption deadline of April 30.

The committee and staff emphasized that the $12.50 number is a maximum for publication; the council may lower the levy at subsequent committee meetings or at the public hearings before final adoption.