M-8 - Budget Special Report - FY 2024-2025

Cities are reminded that economic instability and fluctuating fuel consumption and costs can result in immediate changes in the fund. The IDOT issues per capita forecasts only and cities are only entitled to receive their share of the amount actually collected. The estimates are subject to dramatic changes and cities should consider using a conservative estimate. Also, the estimates are based on current law regarding specific revenue to and disbursement from the RUTF. Any change in the law could change the per capita amount to be distributed to cities. <table> <tr> <th>Fiscal Year</th> <th>Iowa DOT Per Capita Forecast</th> </tr> <tr> <td>FY 2024</td> <td>$132.00</td> </tr> <tr> <td>FY 2025</td> <td>$133.00</td> </tr> <tr> <td>FY 2026</td> <td>$134.00</td> </tr> <tr> <td>FY 2027</td> <td>$135.00</td> </tr> <tr> <td>FY 2028</td> <td>$136.00</td> </tr> </table> Transfer of Road Jurisdiction: Cities Under 500 In 2004, counties in Iowa assumed responsibility for maintenance of Farm-to-Market (FM) roads in cities with a population less than 500. A transfer of RUTF money based on the total length of the FM roads in each of these cities was also transferred to the respective county. Many cities have entered into 28E agreements with the county to return a portion or all of the responsibility for the road back to the city, along with a corresponding amount of RUTF funds. The State Auditor’s Office has stated that funds transferred back to the city from the county are still restricted in the same manner as all Road Use Tax revenue, because road use tax funds are restricted to be spent for roads by Article VII (8), Iowa Constitution. As such, the revenue received under the 28E agreement should be recorded in the city’s Special Revenue Fund as: • Intergovernmental • Local grants and Reimbursements This revenue should not be recorded as road use tax revenue by the city since it is already recorded as road use tax revenue when received by the county. The money must also be spent in accordance with Code of Iowa Chapter 312 and any terms and conditions of the 28E agreement. The IDOT modified how FM roads are designated, which altered the amount of such roads in some communities. Additionally, the 2020 Census resulted in ten cities dropping below 500 in population and therefore being subject to this law. Local Option Sales and Service Tax Cities in Iowa are allowed to establish a Local Option Sales and Service Tax (LOSST) upon approval by its citizens. Rates are limited to one percent and cities must specify on the ballot the purposes of the revenue, including any that will be used for property tax relief. Beginning in FY 2023, the Iowa Department of Revenue (IDR) implemented a distribution system based on revenues actually collected, which replaced the previous system that based distributions on estimates.