Iowa Senate File 2472 and Impacts on the City of DubuqueCopyrighted
August 3, 2026
City of Dubuque WORK SESSION #
City Council
ITEM TITLE: 5.15 PM - Iowa Senate File 2472 and Impacts on the City of
Dubuque
SUMMARY: Chief Financial Officer Jennifer Larson will make a
presentation on Iowa Senate File 2472 and Impacts on the
City of Dubuque.
SUGGUESTED
DISPOSITION:
ATTACHMENTS:
1. Work Session Iowa Senate File 2472 and Impacts on the City of Dubuque_ MVM
Memo_2026_07_28
2. Work Session Iowa Senate File 2472_ Staff Memo_2026_07_28
3. IA SF2472 Work Session Presenation
Page 10 of 1281
THE CITY OF
DUB E
Masterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
Dubuque
AIFAnti Ciq
2007-2012.2013
2017*2019
SUBJECT: Work Session — Iowa Senate File 2472 and Impacts on the City of
Dubuque
DATE: July 28, 2026
Chief Financial Officer Jennifer Larson will make a presentation to the City Council for
the work session on Monday, August 3, 2026, at 5:15 p.m. The presentation will focus
on Iowa Senate File 2472 and Impacts on the City of Dubuque.
Michael C. Van Milligen
MCVM/jml
Attachment
cc: Crenna Brumwell, City Attorney
Cori Burbach, Assistant City Manager
Jennifer Larson, Chief Financial Officer
Page 11 of 1281
THE CITY OF
DUB E
Masterpiece on the Mississippi
TO: Michael C. Van Milligen, City Manager
FROM: Jennifer Larson, Chief Financial Officer
Dubuque
AIFAnti Ciq
2007-2012.2013
2017*2019
SUBJECT: Work Session — Iowa Senate File 2472 and Impacts on the City of
Dubuque
DATE: July 28, 2026
INTRODUCTION
The purpose of this memo is to submit to a presentation on Iowa Senate File 2472 and
Impacts on the City of Dubuque for the City Council work session on Monday, August 3,
2026, at 5:15 p.m.
116*401 4IQ k
This work session provides an overview of Senate File 2472 and the major financial and
policy implications for the City of Dubuque. The legislation makes significant changes to
Iowa's property tax system and to the financial rules governing cities. It affects General
Fund property tax revenue, state replacement payments, homestead taxation, General
Fund reserves, debt financing, and Tax Increment Financing. Several provisions are
already effective. Many of the most significant budget impacts begin in Fiscal Year
2028.
The purpose is not to cover every technical provision of the legislation. It is to provide
City Council with an understanding of what changed, what it may mean for Dubuque,
and what questions remain as we prepare for implementation.
ACTION REQUESTED
I respectfully request that the City Council receives and files the presentation on Iowa
Senate File 2472 and Impacts on the City of Dubuque for the work session on Monday,
August 3, 2026 at 5:15.
Page 12 of 1281
THE CITY OF
i WISM111"M
Masterpiece on the Mississippi
Iowa Se,icta... File 2472
Financial-" � icy Impacts
August 3, 2026
01
SF2472 Changes the City's rDu�s � JE
Financial Framework Masterpiece °„ the Mississippi
• Property taxes — New limits on General Fund
• State funding — State replacement payments eliminated
• General Fund reserve — New restrictions
• Debt financing — New limits on using debt for operations
• Tax Increment Financing- TIF duration and revenues
2
THE Cji
DabE
Genp Fund PropertV Tax Revenue Maste Masterpiece on the Mississippi
rP PP
FY 2028 General Fund property tax revenue new limitations.
• FY2028-FY2030 — Maximum General Fund levy rate
calculated using:
• 102% of prior year's actual property tax dollars divided
by taxable valuation excluding qualifying new valuation
FY 2031 and after limited to the lesser of:
• 102% of prior -year property tax revenue + qualifying
new valuation
• OR Revenue generated by the statutory $8.10 levy rate
3
What the 2% Limitation Means
THE CITY OF
DUB abE
Masterpiece on the Mississippi
Property value growth does not necessarily equal City
revenue growth.
• If taxable valuation grows faster than allowable General
Fund revenue
• Levy rate may decline
• This creates a greater separation between growth in the
tax base and growth in revenue available to provide
services
al
THE CITY OF
DUBabasterpiece
E
State Re Iacement Revenue Ends Mon the Mississippi
Business property tax replacement
• Commercial and industrial 90% and first tier rollbacks
• FY2027 Final year of payment
• $646,440 Revenue Loss
Homestead Credit
• FY2028: 66.6% of FY2027 payment
• FY2029:30.3%
• FY2030 and after: $0
5
THE CITY OF
DUB abE
Homestead Exemption Impact Maste iece on theMasterpiece Mississippi
Estimated Local Impact
• Approximately 12,168 homestead properties in Dubuque.
• Approximately $222.9 million estimated reduction in
taxable assessed value.
• Estimated gross reduction in potential City property tax
revenue of approximately $2.24 million using the FY2027
City tax rate.
• State replacement payments phase out by FY2030.
1.1
THE CITY OF
DUBabE
General Fund Reserve m �f
Masterpiece on the Mississippi
Beginning in Fiscal Year 2028:
• Unassigned General Fund reserves limited to 35% of
current -year budgeted General Fund expenditures.
Bond Rating Exception
— does not
apply
to a government
maintaining the
highest
qualifying
bond
rating
Obligated funds — funds designated for qualifying planned
obligations are excluded from the 35% calculation
THE CITY OF
Debt FinancingRules Have Changed Dji E
Masterpiece on the Mississippi
Effective July 1, 2026:
• Cities may not issue property -tax -supported debt for
normal operating expenses.
Examples include:
• Salaries
• Employee benefits
• General governmental services
Capital expenditures remain excluded from the definition of
general operations.
THE CITY OF
Tax Increment Financina le% Changing DUB E
Masterpiece on the Mississippi
New TIF Ordinances — Adopted on or after 5/18/2026 have a
maximum of 23-year revenue collection period
Existing TIF Ordinances with no statutory expiration will be
limited to 60% of available increment and 40% distributed to
affected taxing entities beginning in FY2047
THE CITY OF
Futu.,ChangesT�F Revenue DUB abE
Masterpiece on the Mississippi
School Foundation Levy
• TI F ordinances adopted on or after 1 /1 /2027, school
foundation levy cannot be captured by TIF.
• Begins with taxes due and payable in FY2029
• School district may voluntarily contribute foundation
levy revenue following approval by school board
• FY2027 school foundation levy is $5.40
10
THE CITY OF
Provisions Interact DUB abE
Masterpiece on the Mississippi
SF2472 is not a series of independent changes
City will be managing:
• Property tax revenue limitations
• Eliminated State replacement revenue
• Lower taxable value from homestead exemptions
• Reserve requirements
• Changes to debt
• Changes to TIF
11
THE CITY OF
Unanswer Questions
DUBabE
Masterpiece on the Mississippi
Questions remain regarding:
• Is the Trust and Agency Levy excluded from 2% cap?
• What constitutes prior -year actual property tax dollars?
• Can unused levy authority be carried forward?
• How will the 35% General Fund Reserve calculation be
measured?
• What expenditures qualify for obligated funds?
• Which bond ratings qualify for the exemption?
• How will the 23-year period and 60% limitation be
calculated?
• How will existing development agreements be treated?
12
Implementation Timeline
Effective Period Major Change
THE CITY OF
DUB abE
Masterpiece on the Mississippi
July 1, 2026 Debt restriction for general governmental operations effective
Assessment Year 2026 New homestead exemption begins
FY2027 Final year of business property tax replacement payments
January 1, 2027 School foundation levy excluded from new TIF ordinances
FY2028 General Fund 2% revenue limitation begins
FY2028 35% unassigned General Fund reserve limitation begins
FY2028 Business property tax replacement payment ends
FY2028—FY2030 Homestead replacement payments phase out
FY2029 Financial impact of school foundation levy TIF exclusion begins
13
THE CITY OF
What This Means for Future Decision,. DUB abE
Masterpiece on the Mississippi
• Revenue growth may be more constrained relative to
expenditure growth
• Revenue assumptions need to reflect new statutory
limits
• City will need to align reserve planning with new
requirements
• Capital planning & debt financing strategies will require
additional review
• TIF projections and development agreements need to
reflect new rules
14
Implementation Approach
THE CITY OF
DUB abE
Masterpiece on the Mississippi
• Continue working with State agencies, legal counsel,
auditors, and municipal finance professionals to clarify
implementation
• Refine Dubuque -specific financial projections
• Incorporate legislation into budget, reserves, capital
planning, debt managements, & economic development
strategies
• Update City Manager as State issues implementation
guide
15
Key Takeaway
THE CITY OF
DUB abE
Masterpiece on the Mississippi
Primary issues are:
• Slower growth in General Fund property tax revenue
• Loss and phaseout of State replacement revenues
• Approximately $222.0 million lost in taxable value
affected by new homestead exemption
• New General Fund reserve requirements
• New debt financing restrictions
• Significant changes to TIF
• Important implementation questions still awaiting
State guidance
• Full financial impact will develop over several years
16
THE C
DUj!BaFE
Masterpiece on the Mississippi
Dubuque
Finance Department
50 West 131, Street
Dubuque, Iova 52001-4845
(
Office (563) 589-4398
I I I I
Fax (563) 690-M89
TTY (563) 690-6678
2007-2012.2013
financeld
�city 0fdubuque.org
2017 * 2019
n-A-•.cityofdubque.org
Page 29 of 1281