Some counties may be holding on to more reserve funds than necessary.
High property taxes are the number one issue in most Iowans’ minds. When the Iowa Legislature attempts to fix this problem by lowering the amount of property tax counties and other local governments can collect, some claim they will have to cut emergency management positions or other core government services to make up the difference. This threat is intended to stop the Legislature from restricting counties’ taxing ability. ITR Foundation decided to see if there was any validity in this threat, so we reviewed financial information in all of Iowa’s 99 counties to see exactly how much counties have on-hand in a rainy day fund or reserve account to dip into if or when their budgets end up in a pinch.
In local government finance, reserve funds are also referred to as “ending fund balances.” Essentially, they represent the accumulation of operating surpluses a county has been able to leave untouched and available for future use. Of course, because nothing is straightforward in government finance, many different types of reserve funds exist, but the one considered a true reserve fund is the General Fund Unassigned Fund Balance. Local governments aren’t restricted in how they can spend “unassigned” dollars. They can stabilize cash flow during the first few months of a fiscal year before receiving property tax payments, provide cushions for unexpected expenditures or unforeseen dips in revenue, or apply them to any other uses that state or local rules don’t forbid.
The following map of Iowa’s 99 counties shows their reserve funds as a percentage of their expenditures — that is, how much of their budgets they could fund with no revenue at all. A good governance rule of thumb suggests a responsible and reasonable ending balance target would be somewhere between 15 and 30 percent of annual General Fund Expenditures. Unassigned General Fund dollars, or reserves, beyond that range may be considered excessive.
For fiscal year 2025, Iowa counties had $595 million in their General Fund unreserved fund balances, compared with around $3.5 billion in General Fund expenditures. The average for all 99 counties came to 17 percent, within the ideal target range. However, some counties may be holding on to more reserve funds than necessary while others are not holding nearly enough.
Buchanan County has the highest percentage, with 86 percent, and Polk County has the largest balance overall, at $73.8 million. Benton County has zero reserves, Pocahontas County has almost zero, and Lucas County only has 1 percent of total expenditures in reserves. That means if there was some unforeseen event that caused these counties to need additional funds, they would either have to cut somewhere or raise taxes. And while having zero or near zero reserve funds is not a good situation to be in, having negative reserve funds is even worse. Tama County has nearly a million in negative reserve funds, amounting to 3 percent of their annual expenditures, which means they are either overspending or they have an accounting problem.
In total, 12 counties are holding more than 30 percent of their expenditures in unreserved fund balances, with four of them over 50 percent of expenditures. On the other side of the scale, 69 counties have less than 15 percent of their annual expenditures in their reserve accounts.
Details for your county can be found directly on our source: FY2025 Annual Budgets from Iowa Department of Management
If you decide to look at the data yourself, keep in mind that counties use different accounting methods: cash accounting and accrual, or Generally Accepted Accounting Principles (GAAP), accounting. While this distinction doesn’t make a big difference to most of us, it matters significantly when digging into counties’ budgets and aligning tax collections and expenditures. Five counties (Black Hawk, Cerro Gordo, Linn, Scott, and Woodbury) use GAAP.
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