(Atlantic) On Wednesday, April 15, the Atlantic City Council will conduct a public hearing and later act on the proposal at the meeting starting at 5:30 p.m. in the City Council Chambers.
Atlantic City Administrator John Lund says, “The FY 2027 Budget is an extraordinarily cautious one intended for benchmarking the FY 2028 Budget, which is where the hurricane of property tax reform will land.”
The proposed FY 2027 budget totals $16,159,683 in expenditures. This represents a decrease of 14.01% or $2,633,122 in expenditures from the FY 2026 Budget of $18,792,805. The City’s combined property tax levy will decrease from $17.85 to $17.48.
“As was the case in FY 2026, this budget should be considered a tentative budget that will likely require a significant amendment during FY 2027,” said Lund. “State law requires adoption of the city budget prior to the conclusion of the legislative session. With competing Senate File 2472 and House File 2745 as the largest proposed overhauls of Iowa’s property tax system since its original implementation, the City’s current and future financial outlook is subject to unprecedented uncertainty.
“Unlike prior years, the uncertainty before the city is no longer incremental or transitional in nature. Since the implementation of the original residential rollback and subsequent legislation beginning in 2012, local governments have operated under a system that, while complex, frequently amended, and increasingly restrictive, still allowed for long-range modeling, trend analysis, and scenario planning. That era is over,” said Lund.
Lund says the proposed legislation represents a fundamental structural reset of Iowa’s property tax framework. While details remain fluid, the direction is clear: hard statutory growth limits that are disconnected from true inflation, service demand, or local economic conditions. This new framework is explicitly designed to constrain local government capacity rather than balance taxpayer funding with service sustainability and expectations.
Lund added that under such conditions, formal 10-year forecasts no longer serve their intended purpose. Any projection would rely on assumptions that are not merely uncertain, but unknowable. Producing long-range forecasts under these circumstances would create the illusion of financial stability and predictability that cannot reasonably be assured. For this reason, while the City continues to maintain internal scenario modeling for management and planning purposes, no formal 10-year forecast is presented in this document.
Lund presented the following key elements to this budget are as follows:
* The combined General Fund Levy (CGFL) does as state policy dictates, it went from $8.10 to $7.86, repeating the behavior we saw in the FY 2025 Budget. The employee benefits levy is in great danger under property tax reform, so it is going up from $4.55 to $4.86 to generate $153,398, creating a new benchmark for any attempt to place a percentage cap growth.
* The insurance levy is also under threat under property tax reform and never seems to hit the cost target. It is increasing from $0.67 to $0.80.
* The debt service levy is under no threat under property tax reform; it is being lowered for a period from $4.50 to $3.96.
*A 3% increase in compensation to all non-union City employees under the control of the City Council. A 4.25% increase for Police Union employees.
*One-time and declining revenues from interest income should soften blows from property tax reform; however, it is a mathematical fact that this is a finite and disappearing resource, and structural spending on this is highly ill-advised. This budget accordingly reflects one of the necessary investments that can keep the City financially robust much longer than our peers during sustained financial distress.
*Continuing the ongoing practice of transferring resources beyond required minimums towards inevitable liabilities in specialized funds. A major financial milestone that will get positive attention from Auditors and Credit Assessors is the 100% funding of our Post-Employment Benefits. (PEB). Atlantic’s current liability is $305,000 in accrued employee benefits. Our Employee Benefits Cash-Out Fund began FY 2025 at 32% funded, with $107,045.87. Using interest from the 2026 Bond Series to neutralize a liability from the books will prove to be a masterstroke of financial planning, as most cities do not address these liabilities separately. As cities see departments collapse due to fiscal strain, they will still have to pay out these benefits, further straining finances. Atlantic? Non-issue.
*No increases to existing, non-utility fees are proposed.
*This budget will continue years of liquidity growth. Fund balance reserves are all at their required minimum, with growth reflecting increases in overall operating expenditure.
*The City’s Comprehensive Financial Policy continues to be the basis of the City’s budgeting practices.
Lund says changes from the FY 2026 Budget to the FY 2027 Budget include new structural revenues, new structural expenditure losses, new structural revenue losses, and new structural expenditures. Combined, they net a superficial positive of $80,665.98 in the City’s structural surplus. However, we have always been playing catch-up on property and liability
insurance, since that was an old cost that has already been realized and now being corrected, it is not reflected in this table.
New Structural Revenues – $336,235.98
*General Fund Property Taxes – $65,691
*Insurance Levy Property Taxes – $36,959
*Employee Benefits Property Taxes – $150,343
*Cost Allocation (Transfers In) – $44,830
*Interest Income – $21,687.98
*Campground Rental – $12,346
*School District (SRO) Refund – $4,379
New Structural Expenditures Losses – $309,920
*Ambulance/EMS Service – $309,920
New Structural Revenue Losses – ($315,071)
*Commercial/Industrial Backfill – $7,072
*Tier II Business Property Tax Credit – $95,997
*Ambulance/EMS Refunds – $167,172
*Cost Allocation (Transfers In) – $44,830
New Structural Expenditures – ($250,419)
*Direct Labor Costs – $168,277
*Police & Fire Annuities – $494
*Payroll Taxes & IPERS – $12,767
*Liability Insurance – $3,310
*Student Resource Officer – $6,086
*Health Insurance Costs -$50,309
*All Other Employee Benefits – $9,176
“Iowa communities, especially rural Iowa communities, are facing daunting financial challenges,” said Lund. “Atlantic faces great uncertainty, and it is probable that we too will share in painful and unpopular outcomes resulting from the cumulative effect of property tax legislation since 2012.”
