The fiscal year 2026 budget work session held by the Camanche City Council revealed a concerning financial outlook. City Administrator Andrew Kida highlighted significant reductions in property tax revenues, exacerbated by legislative changes affecting local funding. The city faces an impending revenue deficit and must explore alternative income sources or implement budget cuts to maintain essential services.

Facing Revenue Shortfalls: Property Tax Reductions and Legislative Impact

City officials are grappling with a substantial decline in property tax collections. Over the past year, the amount collected has plummeted from $82,000 to just $26,000. This reduction is part of a phased-out backfill funding mechanism introduced in fiscal year 2023, which aims to compensate cities for corporate tax breaks. By 2030, this support will be entirely eliminated, leaving municipalities like Camanche without a crucial revenue stream.

In May 2023, House File 718 was enacted, providing Iowa residents with $100 million in property tax relief. While beneficial for homeowners, this legislation imposes levy rate caps starting in fiscal year 2029, significantly limiting local governments' taxing authority. As a result, Clinton County is already assessing potential budget cuts and reductions. City Administrator Kida projected that property tax revenue will drop to $13,000 next year and eventually vanish by 2028, representing a loss of approximately $82,000 in annual income. This situation necessitates immediate action to find new revenue streams or adjust service delivery models.

Seeking Solutions Amidst Budget Constraints

The city's general fund, which covers employee salaries, is facing a projected deficit of $124,000. To address this shortfall, Kida suggested reallocating certain salaries from proprietary funds such as water, sewer, and garbage services. However, this would require increasing rates for these utilities to cover the additional costs while maintaining current service levels. Alternatively, the city may need to consider cutting expenses in other areas.

Despite these challenges, Camanche can expect to receive around $715,000 in local option sales tax revenue from transactions within the city. However, Kida warned the council about the redirection of this revenue towards state water quality programs instead of directly benefiting the city. He emphasized the importance of ensuring that state representatives understand the intended use of this tax, which was voted on by local residents. With the budget due to be submitted to the state in April and the county by the end of March, the city must prepare for a difficult financial period and take proactive measures to secure its financial stability.