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Coralville staff present draft FY2027 budget showing $439,042 deficit and warn of state levy changes
Summary
City staff outlined a Fiscal Year 2027 draft budget with a $439,042 general fund gap, an $862,612 COLA wage increase and concern that proposed state limits could force benefit levies under a 2% cap, potentially requiring major cuts.
City staff presented the draft Fiscal Year 2027 budget at a Coralville work session on Jan. 20, citing a remaining general fund deficit of $439,042 and warning that pending state proposals could materially reduce the city’s ability to raise revenue.
Finance Director Ann Hester said the city used a 4.67% rise in property values and a 2% limitation factor in preparing the draft, producing $332,217 in new property tax dollars. "The tax levy is expected to be $14.52739 which is the same as last year," Hester said. She told the council the budget includes an $862,612 increase for cost-of-living adjustments compared with FY2026 and that benefits are projected to increase by about $386,000.
City Administrator Kelly Hayworth told the council a legislative proposal under consideration could combine separate levies for benefits, liability and transit with the regular property tax levy and subject them to the 2% increase cap. Hayworth said that scenario is "a major concern" because wage, benefits and insurance cost increases would likely exceed the 2% limit and could force more than $800,000 in cuts unless alternative revenue sources are found.
Department heads described program-level changes that feed the general fund and enterprise planning. Highlights included Parks & Recreation requesting targeted equipment and personnel adjustments while funding some purchases from reserves; the library drawing $100,000 from reserves for computer and server replacement and shifting a Community Outreach Coordinator to a fully funded position; and police proposing one additional officer, funds for a sergeant assessment center and $100,000 in reserves to replace an aging records system.
Staff asked the council to note statutory deadlines: the draft budget must be received by the State by April 30 and the tax levy submitted to the State and Johnson County by March 5, with county notices scheduled by March 15. Hayworth and Hester said they will continue closing the deficit through February and will present models from the city’s financial adviser to show how different property-tax proposals could affect the budget.
Next steps: staff will refine revenue and expenditure options, present the General Fund balancing approaches at upcoming meetings, and return with final recommendations before the statutory submission dates.
