Approving and Amending the Budget

Cities are required to pass a budget annually and there are quite a few steps that must be followed before and after a budget is approved. Additionally, cities may need to amend their budget for a variety of reasons but again must follow the proper procedure.

Approving and Submitting the Budget

A city budget is required to be submitted on forms prescribed by the Iowa Department of Management (IDOM). These forms are made available to cities every November and can also be accessed on the IDOM Web site. According to Code of Iowa Section 384.16, the budget must include expenditures for each program, income from sources other than property taxes and the amount of revenues to be raised by property taxation. The budget must also show a comparison between the actual revenues and expenditures from the previous fiscal year, the latest estimate for the current fiscal year and those proposed for the upcoming fiscal year.

In order for the state and the county auditor to have the necessary time to administer the levying of property taxes, cities are required to have their budgets approved and certified to the IDOM and county auditor by March 31 of each year (this deadline was approved as part of legislation adopted in 2019 by the state legislature, replacing the old deadline of March 15).

Beginning with the Fiscal Year 2021 budget, cities will now be required to do some additional steps to approve its annual budget. The additional steps were part of Senate File 634, which was approved by the state legislature in 2019. The law now requires all cities to pass a new resolution establishing their maximum property tax dollars to certify for levy, post notification, and hold a public hearing and vote. The notice of public hearing and proposed maximum property tax dollars is required to be published no less than 10 but not more than 20 days prior to the date of the hearing. Cities with populations fewer than 200 may meet the publication requirement by posting the notice of hearing and budget summary in three public places in the city. All cities must also post an electronic link to the notice on any and all existing city websites and social media sites.

The notice must include the sum of the current fiscal year’s actual property taxes certified under the levies specified to be impacted by the 2% threshold*, the current fiscal year’s combined tax levy rate for such amount applicable to taxable property (excluding agricultural or horticultural property), the effective tax rate calculated using the sum of the current fiscal year’s actual property taxes for the levies specified under the 2% threshold applicable to property that is not agricultural or horticultural, and the sum of the proposed maximum property tax dollars that may be certified under the levies subject to the new 2% threshold. The city must also include a statement of the major reasons for the increase if the proposed maximum property tax dollars exceeds the current fiscal year’s amount. The IDOM will provide cities a template form to use for this notice.

*The new law sets a threshold of 2% growth from the previous fiscal year’s actual property tax dollars to the proposed property tax dollars for the upcoming fiscal year (this pertains to the specific levies identified in SF634). Any cities that need to exceed the 2% growth limitation must receive two-thirds approval from the council to move forward. Cities not needing to exceed the 2% threshold can approve the resolution by simple majority.

Please view two League webinars for additional guidance on the changes to the budget process that were adopted by the state legislature.
Following the initial hearing and resolution cities can proceed under the former process, which requires the city council to set a time and place for a public hearing and publish a summary of the proposed budget in a newspaper published at least once weekly and with a general circulation in the city. The notice of public hearing and budget summary is required to be published more than 10 but not more than 20 days prior to the date of the hearing. Cities with populations fewer than 200 may meet the publication requirement by posting the notice of hearing and budget summary in three public places in the city. As a practical matter, in order to meet the submission requirements for most weekly newspapers, the city will need to have their budget ready by mid-February. State law also requires the city clerk to have a sufficient number of copies of the detailed budget available for distribution at the office of the mayor, clerk and at the city library, if any, or have a copy posted at one of three places designated by ordinance for posting notices.

At the public hearing, any resident or taxpayer of the city may present to the council objections to any part of the budget. Following the hearing, the only change that can be made to the proposed budget is a reduction in the published property tax levy. Once the hearing is closed, the council is required to approve the budget by resolution and the city clerk is required to certify the approved property tax levy for the next fiscal year. To file the budget with the county auditor submit two signed copies of the Adoption of Budget & Certification of Taxes, one paper copy of the detailed budget, one copy of the Excel budget file by uploading it to the IDOM Web site and an original proof of publication or affidavit of posting. The auditor is statutorily required to verify publication and that the proper documents are filed before property taxes can be levied.

Amending the Budget

The time lapse between the budget preparation, approved budget and the end of the fiscal year can be 15-18 months. Due to unforeseen circumstances, cities often find that they will be spending more than originally certified or within different priority areas or programs in their budget. The budget amendment is a process the city is required to follow to obtain the authority to expend funds not previously anticipated under the original budget or subsequent amendments. Budget amendments are expenditure driven; cities are not required to file an amendment if they receive additional revenues.

Under Code of Iowa Section 384.18, city budgets may be amended for any of the following purposes:

  • To permit the appropriation and expenditure of unexpended, unencumbered cash balances on hand at the end of the preceding fiscal year which had not been anticipated in the budget.
  • To permit the appropriation and expenditure of amounts anticipated to be available from sources other than property taxation, and which had not been anticipated.
  • To permit transfers from the debt service fund, the capital improvements reserve fund, the emergency fund, or other funds established by state law, to any other city fund, unless specifically prohibited by state law.
  • To permit transfers between programs within the general fund.

Cities account for expenditures in the following program areas:

  • Public Safety
  • Public Works
  • Health and Social Services
  • Culture and Recreation
  • Community and Economic Development
  • General Government
  • Debt Service
  • Capital Projects
  • Business Type Activities (Utilities)

Cites are only required to amend if they anticipate spending more than was budgeted in a given program.

The budget amendment must be prepared and adopted in the same manner as the original budget using the forms provided by the IDOM. Once the public hearing notice is prepared, the city council is required to set the time and place for a public hearing on the proposed amendment and publish the notice not less than 10 and not more than 20 days before the hearing in a newspaper published at least once weekly and having general circulation in the city. However, if the city has a population of 200 or fewer, publication may be made by posting in three public places in the city. At the public hearing, any resident or taxpayer of the city may present objections or arguments in favor of any part of the amendment.

Following the hearing, the council adopts the budget amendment by resolution. Two copies of the budget amendment must be filed with the county auditor along with one proof of publication. The auditor in turn completes the certificates and transmits a copy of each to the IDOM. Currently, budget amendments are not required to be filed electronically with IDOM. Cities are required to approve a budget amendment before they spend additional funds in any program area. For many cities the amendment is done in the late spring. However, if necessary, the city may amend its budget as many times as necessary as long as the last date to amend is before May 31. This allows time for any possible protest hearing to be held and a decision rendered before June 30. The budget can be amended after May 31; however, if the amendment is properly appealed, there is no time for a required hearing and decision before June 30 and the amendment is deemed null and void.


Under state law, a city failing to certify their budget by March 15 shall be limited to the prior year’s budget amount. However, this penalty may be waived by the director of IDOM if the city demonstrates that the March 15 deadline was missed by circumstances beyond the control of the city. In most cases, the IDOM is willing to work with cities that are facing difficulties in timely certifying their budget. However, a city that is unable to certify its property tax levy before June 15 may be prohibited from collecting any property taxes for the upcoming fiscal year due to the time that is needed by the IDOM and counties to get property tax levies in place for billing in September.

In addition, a city that does not submit a budget according to state law will have all of their state funds withheld until a budget is properly submitted to the IDOM. These funds include Road Use Tax Funds and local option sales tax disbursements. These funds are held by the state and are released once a budget is properly submitted. Finally, the city does not have authority to spend any funds after the beginning of the fiscal year until a budget is properly prepared and approved.

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