Des Moines is facing the culmination of multiple long-standing budgetary crises resulting in its present $17 million annual deficit. Without room in the general fund, transportation is facing cuts, utility rates have been hiked, and agencies reorganized.
The city manager, Peter Zamansky, in January released a proposal to lay out reductions in spending to shrink the deficit this fiscal year. However, policymakers are looking for larger cuts and structural changes to address the city’s long increasing debt burden.
Image via Axios
One of the largest services under scrutiny is Des Moines’ DART bus system. Reimagine Dart is the city’s response to the decision by the communities of Grimes and Pleasant Hills to no longer contribute to funding the municipal bus service. Des Moines, Polk County, and eight suburban communities (Altoona, Ankeny, Bondurant, Clive, Johnston, Urbandale, Windsor Heights, and West Des Moines) have agreed to retain membership in the transit authority and work together over the next 18 months to redesign the system. However, like many services that aren’t turning a profit at the moment, it will likely be reduced to a shell of its current self as it is forced to decide between speed and coverage.
State lawmakers met May 15 without changing tax law. City leaders say lawmakers acknowledge regional public transit’s unique needs, but have prioritized slowing local budget growth over those needs.
(left: current dart coverage, right: after proposed cuts; image via DART)
An earnings tax on those who live outside of Des Moines but commute to the city for work has been advocated by some to address the transit system’s debts, but such a tax remains illegal under Iowa law. Some argue that earnings taxes create negative market distortions and could exacerbate the current budget crisis further. Policymakers fear an earnings tax would decrease population growth and encourage businesses and workers to move and operate outside the city limits to avoid the tax, further lowering the city’s tax base.
Despite rising deficits and debt, in 2023 Republicans passed the homestead tax credit that gave exemption to senior homeowners and limited property tax rate below 3%. As of January 2025, Gov. Reynolds has fully replaced Iowa’s tired progressive income tax system with a flat rate that is estimated to cost the state $600 million in revenue this year. The city has since relied on support from the American Rescue Plan to make up some of that lost revenue; however, in 2025 that support has also ended.
Faced with a need to stay financially solvent and provide essential services, but unable to enact adequate tax reforms, the city has found its solution is rising property values.
In 2018 the city hired consulting firm CBZ to review the city’s development initiatives, which recommended that investing in curb appeal in wealthier neighborhoods and gentrifying the urban downtowns would increase the Des Moines housing market’s competitiveness and raise home prices and tax revenues without high upfront costs associated with providing public services to the poor.
The out-of-state consultant also recommended the city pause the low-income housing tax credit, or LIHTC, and focus on programs like Invest DSM and ION.
The city is taking public feedback on CBZ’s recommendations until June 15th and plans to vote on the program’s continuation June 30th.
Programs like Invest DSM and Habitat for Humanity have increasingly been directed toward “revitalization” projects that promise both homeowners and city officials that these projects will increase property values and generate tax revenue for the city. ReflectDSM, the city’s historic preservation plan, announced in 2023 these goals:
- Stabilize and improve property values and the equity held by the citizens in their property
- Protect and enhance the city’s attraction to tourists and visitors
- Strengthen the economy of the city
Increasingly, government programs and partnered NGOs have begun to operate not as public services, but with tax revenue and market desirability as a primary goal.
Image via CBZ
This has taken the form of the city increasingly targeting its resources toward specifically middle- and upper-class neighborhoods that have been identified for their market and taxable potential, with less attention given to lower-income communities that, from the city’s perspective, possess a lower return on investment and high costs to service.
At the same time, available land for development is increasingly scarce in the urban center near jobs and opportunities. NIMBYs have used zoning laws and litigation to make it difficult and expensive to construct affordable housing in those areas.
One resident in the vicinity of a recent housing development for the homeless in East Des Moines told KCCI, “We don’t want it. We have children; this is a little neighborhood, and we don’t want that kind of stuff in our neighborhood. We have kids.” However, there is evidence that neighborhoods with similar homeless housing projects saw reports of crime drop over 30%.
In 2024, another development proposed by Hope Ministries received majority support from the city council and unanimous approval from the city planning commission to construct affordable group homes between two lots of undeveloped woodlands, but the project was slowed down and ultimately abandoned because of challenges from a handful of homeowners.
For the government and developers, this means affordable housing projects have become easier in areas with less friction and more available land, and therefore have been pushed to the suburbs and periphery of the city. Along with the city’s ordinances this year cracking down on the homeless and its increased police budget, the poor are being priced out and intentionally pushed further away from urban opportunities and resources, in order to attract residents with more desirable income brackets. Des Moines is forced to compete with its own suburbs to generate housing solutions similar to those seen in Ankeny or Waukee.
