The city manager is recommending that Iowa City create an emergency fund and study a sales tax hike to help offset state-approved cuts in property taxes. City manager Tom Markus says the tax cuts on commercial properties and apartment buildings approved by Gov. Terry Branstad could cost Iowa City up to $50 million over 10 years.
Markus says that while lawmakers have pledged to backfill the losses in property taxes with additional state revenue, that is not guaranteed. In a budget proposal released Thursday, he says the city should create an emergency fund that could be used to make up any future shortfalls. Markus says the city should also consider whether to ask voters to impose an additional one-cent sales tax to replace one that expired in July.