City staff previews FY27 budget, urges caution on reserves as property‑tax backfills end

City staff gave preliminary guidance on the FY27 budget at the Dec. 9 council meeting, warning that state commercial property tax backfill payments will phase out and urging council to consider increasing reserve levels.

Finance and administration staff explained that residential rollback will lower the taxable portion of residential property values (example cited: a $200,000 home’s taxable portion falling to roughly 44.53%) and noted commercial property tax backfill payments will end (staff cited a high of about $343,000 in past years). To protect the city’s financial position staff proposed raising the general fund reserve ceiling from 30% to 35% and flagged $300,000 to hold as contingency while FY27 revenues are finalized.

Staff presented the draft FY27 capital improvements program (CIP), identifying about $57 million in ongoing or planned projects, with highlighted items including a new firehouse, water‑treatment facility upgrades and the final phase of a long‑running subdivision project. Ryan and Russ said some projects are contingent on federal dollars or grant schedules and that timing of arterial projects (for example Forevergreen Road and associated roundabouts) will affect construction sequencing.

Transit and levies: staff noted an opportunity to incorporate the I‑380 express bus stop into the city’s transit options and discussed the end of an existing bus route; they encouraged residents to take an ECICOG survey on a potential North Liberty stop.

Next steps: staff asked council to reserve Jan. 20 and Jan. 27 for budget sessions (management team meeting and regular council budget discussion) and will return with modeling on use of local option sales tax, recommended reserve policy language, and updated revenue projections once FY26 close figures are available.