Iowa City organizations that host community events and programming may be forced to work with fewer city funds.

A recent Iowa Supreme Court ruling — which will open the way for some rental-property owners to pay less in taxes — could potentially cost the city $3 million, which would cause a cut throughout all city departments, curbing city-provided services.

Requests for funding applications for fiscal 2013, which were sent out earlier this month, are now being accepted from organizations until early November, City Clerk Marian Karr said.

But the amount of money budgeted toward the organizations is yet to be determined.

For United Actions For Youth, one such human-service organization feeling the financial pinch, the potential cut in funding is especially unfortunate news.

"We’re battling with a lot of decreases in funding, and we’ve been pretty fortunate in being able to replace funding sources with various grants and stuff," development director Cathy Pugh said. "Clearly, it hurts."

And city officials say decreased funds are not likely to rise anytime soon.

"Last year’s budget was lower, and this one will be, too," said City Manager Tom Markus. "We fully expect to have compression on both revenues and expenses."

Adam Bentley, an administrative assistant to the city manager, agreed the budget isn’t expanding and the decision to allocate funds rest with the Iowa City City Council.

"Ultimately, what ends up happening is this goes to City Council, and it makes the decision on how best to divvy out that funding," he said.

For fiscal 2012 the city gave out $110,162 to community events and programming funding requests, and $431,647 as aid to human-service agencies.

But that number may shrink.

"I couldn’t say for sure at this point, but if there is a general cut in funding from all departments, this area will probably see the same percentage reduction," said Kevin O’Malley, the city finance director. "I don’t think it’s the City Council’s desire to affect this area any better or worse than the other departments."

The amount the city normally receives from the federal government for Community Development Block Grants is also expected to drop based on communications with the city, O’Malley said.

Some human-service agencies that benefit from funding include Big Brothers Big Sisters, Johnson County Red Cross, Rape Victim Advocacy Protection, the Free Medical Clinic, as well as a variety of other agencies.

But it’s still early in the process.

"There’s not a whole lot of certainty at this point, and I like to deal with certainty," O’Malley said. "Budgets, as a rule are estimates, they’re not actuals. We can plan for the best of things, but we could get a flood or have a very strong winter, and those things affect our operations."

As applications for funding come in, the city manager sets a budget, which is then reviewed by the City Council, which will decide how to allocate the funds. The budget must be approved by March 15.

Because applications for property-tax reclassification for fiscal 2013 have closed, organizations may see the real effects in fiscal 2014.

But preparations are being made for potential budget issues.

"I do believe that the city manager, knowing that this is on the horizon, is going to start preparing for that," O’Malley said.