Des Moines leaders are bracing for a multi-million-dollar hit to the city’s budget in the 2028 fiscal year, starting July 1, 2027.
Des Moines City Manager Scott Sanders and finance director Nick Schaul addressed the impacts to the city budget caused by property tax-cutting legislation signed into law by Iowa Gov. Kim Reynolds this week. The law’s limits are prompting Iowa cities, including Des Moines, to consider major budget cuts and service reductions.
Here’s what to know about the potential cuts and how you can participate in the budget process.
How drastic is the city’s estimated budget shortfall?
Schaul projects a $12 million shortfall in the general fund for the 2028 budget year but says the city is gearing up for an additional $5 million shortfall in the 2029 budget year, which starts July 1, 2028.
The general fund budget pays for all of the city’s operations and departments and is largely funded by property taxes. It makes up about 24% of the city’s annual budget, Schaul said.
What is causing the estimated shortfall?
City leaders pointed to a property tax reform bill approved by Iowa lawmakers, limiting how much revenue local governments can raise from property taxes — a change projected to lower Iowans’ property tax payments by $4.2 billion over six years.
Gov. Kim Reynolds signed the bill on May 18.
The new law implements a 2% growth cap on local governments’ general fund levies, with exceptions for new construction, and an inflation-adjusted 10% homestead tax exemption up to $20,000.
Sanders told the council the new property tax law is the latest in a decade’s worth of damaging changes to the state’s property tax system that have made it challenging for the city to provide services to its residents.
What does this mean for city departments, services?
Conversations about service cuts have already begun in Des Moines.
Des Moines Public Library Board of Trustees President Tim Hickman previously told the Register the board was given a “very broad range” of what cuts could look like before state lawmakers passed the final version of the bill, with a reduction of library hours on the low end of the range and a potential library closure on the high end.
Public library leaders made their case to protect the system at a Des Moines City Council work session on the morning of May 18.
Sanders said all departments will need to submit initial ideas for savings, but departments may be asked to make additional cuts later to balance the budget.
Council member Rob Barron told the public to prepare for what will be a “big and scary list” of potential cuts, adding that community feedback will be crucial in the process.
Iowa’s capital city also is temporarily suspending its use of TIF in light of the new law, Des Moines city leaders said, until officials get a better understanding of the measure.
How is the city involving residents in the budget process for fiscal year 2028?
Given the magnitude of the cuts, the city is starting its budget discussions over the summer and will provide more opportunities for public input through surveys and work sessions, Sanders said.
Here is the tentative schedule of the budget process:
Virginia Barreda is the Des Moines city government reporter for the Register. She can be reached at vbarreda@dmreg.com.
This article originally appeared on Des Moines Register: Des Moines is eyeing budget cuts in 2028. Here’s how to weigh in:
Reporting by Virginia Barreda, Des Moines Register / Des Moines Register
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