Reminder: Budget Procedure for Iowa Cities and Counties for FY27 Budget

By Attorney Elizabeth Burnett

The annual budget procedures for cities and counties changed significantly in 2023 and 2024. This client alert is being sent to remind city and county budget officers about the necessary steps to adopt FY27 budgets. To view a checklist of the budgeting process, please click here. 

Budget Process:

I. County Auditors are required to send Budget Statements to all property owners or taxpayers in the city or county not later than March 15. Cities and counties must file their Budget Statement reports with the Department of Management by 4 P.M. on March 5. In order to meet this budget statement deadline, cities and counties should plan to start their budgeting process early, including any pre-levy planning, to ensure compliance with the deadline.

II. Budget Statements must include:

1. The sum of the current fiscal year’s actual property taxes certified for levy for all of the city or county’s levies and the combined property tax rate per $1,000 for such tax amount for the current fiscal year;
2. The combined effective property tax rate for the city or county calculated using the sum of the current fiscal year’s actual property tax certified for levy of all of the city or county’s levies above;
3. The combined amount of the property tax dollars to be certified for all of the city or county’s levies for the budget year and the proposed combined property tax rate per $1,000 for such levies;
4. If the proposed property tax dollars specified under (3) exceeds the current fiscal year’s actual property tax dollars certified for levy specified in (1), a detailed statement of the major reasons for the increase, including the specific purposes or programs for which the city or county is proposing an increase;
5. An example comparing the amount of property taxes on a residential property with an actual value of $100,000 in the current fiscal year and such amount on the residential property using the proposed property tax dollars for the budget year, including the percent change in such amounts. For the budget for fiscal years beginning on or after July 1, 2025, an example comparing the amount of property taxes on a residential property with an actual value of one hundred thousand dollars in the current fiscal year and one hundred ten percent of such amount on the residential property using the proposed property tax dollars for the budget year, including the percent change in such amounts. 
6. An example comparing the amount of property taxes on a commercial property with an actual value of $100,000 in the current fiscal year and such amount on the commercial property using the proposed property tax dollars for the budget year, including the percent change in such amounts. For the budget for fiscal years beginning on or after July 1, 2025, an example comparing the amount of property taxes on a commercial property with an actual value of three hundred thousand dollars in the current fiscal year and one hundred ten percent of such amount on the commercial property using the proposed property tax dollars for the budget year, including the percent change in such amounts.
7. The city or county’s percentage of total property taxes certified for levy in the owner’s or taxpayer’s taxing district in the current fiscal year among all taxing authorities;
8. 8. The date, time, and location of the city and county’s public hearing on the information contained in the Budget Statements. The proposed property tax hearing shall be set on a date on or after March 20 of the budget year immediately preceding the budget year for which the tax is being proposed. This hearing must be separate from any other meeting of the city or county including any meeting or public hearing relating to the city or county’s budget and other business of the city or county not related to the proposed property tax amounts and the information in the Budget Statements. Information not related to the proposed property tax amounts and information in the Budget Statements may NOT be conducted at the meeting at which this public hearing is held.
9. Information on how to access the city or county’s Budget Statement and other budget documents for prior fiscal years on the city or county’s internet site.
10. A link to the department of management’s internet site where the property owner or taxpayer may view an example of the statement and a brief explanation of the information included on the statement. This requirement is retroactive to January 1, 2024.

III. For cities and counties that fail to certify a budget, they may levy and collect taxes for the fiscal year in which the budget was not certified, but the county is prevented from distributing any funds collected from the levies to the city or county until the city or county certifies its budget and transmits the certified budget to the county auditor. For cities or counties that certify a budget after April 30, taxes levied shall be limited to the taxes levied for the previous fiscal year subject to applicable levy rate limits. Iowa Code Section 384.16 (for cities) and Section 331.434 (for counties) enumerates a number of reasons the Department of Management may waive such limitation for a city or county. 

Cities and counties with questions related to impacts on public financing should consult their attorney, bond counsel and/or municipal advisor.

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Our Client Alerts are intended to provide occasional general comments on new developments in Federal and State law and regulations which we believe might be of interest to our clients. The Client Alerts should not be considered opinions of Ahlers & Cooney, P.C., and are not intended to provide legal advice. Readers should not under any circumstance act upon the information in this publication without seeking specific professional counsel. Please note that AI tools may not accurately interpret or apply the legal information contained in this alert; reliance on such tools is not a substitute for professional legal advice. Ahlers & Cooney will be pleased to provide additional details regarding any article upon request. Additional copies of this Client Alert may be obtained by contacting any attorney in the Firm or by visiting the Firm's website at www.ahlerslaw.com. 

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