03/19/2026
How informational!!
📊 Your Money. Your City. Let's Talk About It.
With the City's property tax public hearing approaching and budget work actively underway, we're launching a series of posts to pull back the curtain on Ottumwa's finances — where the money comes from, where it goes, and the real challenges your City is working through. Fair warning: this one is significantly longer than our usual posts but learning about City of Ottumwa finances is worth it.
What Are We Looking At?
The graphic below is called a Sankey diagram — a flow chart where the width of each band represents the relative size of the dollar amount it carries. The thicker the band, the more money flowing through it. On the left are revenue sources. On the right are the departments and funds those dollars support. Follow any band from left to right and you can see exactly which revenue source is paying for which service.
Where Does the Money Come From?
Ottumwa's budget draws from several distinct revenue streams — and this is important, because they are not interchangeable:
🔵 Property Tax is the largest single source and flows toward the Employee Benefits Fund, Debt Service, Public Safety (Fire and Police), and General Fund operations — which in turn supports departments like General Government, Culture and Recreation, Health and Social Services, Community Development, the Library, and Bridge View Center.
🟠 Charges for Services and Franchise Fees contribute to General Fund operations alongside property tax.
🔵 Road Use Tax — a state-distributed fund — is what actually pays for Street Operations and Maintenance. Property tax dollars do not fund your streets. That is a dedicated state fund entirely separate from local property taxes. When you hear that roads need work, the constraint is Road Use Tax revenue, not property tax levels.
🟣 Local Option Sales Tax supports Street Capital Projects and provides Property Tax Relief.
🟢 Sewer User Fees fund Sewer Operations — self-supported by ratepayers.
🟡 Federal and State Grants support Other Capital Projects.
🔴 Airport Operating Revenue, Landfill Fees, and Recycling Fees & Materials each operate as essentially self-funded enterprises, supporting their respective operations.
A Note on Debt Service
You'll notice Debt Service receives a significant share of property tax revenue. Debt service covers the City's bond payments — money borrowed for large capital investments. It is worth being transparent here: debt service can be used to finance major street projects when project costs exceed what Road Use Tax or sales tax revenue can cover. However, the City works to hold debt service at a consistent level year over year, so that taxpayers are not seeing this line item spike unpredictably. It is not a slush fund — it is a managed, roughly stable obligation.
Why Does This Matter Right Now?
Iowa's property tax reform landscape is shifting, and the City must plan carefully around revenue it may no longer be able to count on at historical levels. Understanding which services are tied to which revenue streams helps explain why cuts in one area don't automatically free up dollars for another. These are largely separated systems — by state law, by fund type, and by voter-approved purposes.
This diagram was created from the fiscal year 2026 budget. We are currently working on the fiscal year 2027 budget. The general flow of the funds will be the same, though.
