The Cherokee City Council approved the budget for the 2006/07 fiscal year beginning July 1 on a vote of 3 to 1 at the Tuesday meeting.
An aspect of the budget that created much discussion at previous meetings is the preservation of two full-time driver dispatchers for the Cherokee Fire Department, although there had been discussion of making the fire department all volunteer.
There had also been discussion of reducing the police department but that was not done either.
The total city levy will go from $16.47316 per $1,000 taxable valuation to $15.97827, a reduction of about 50 cents. This primarily results from a reduction in the employee benefit levy. The debt service levy remains stable and the general fund levy remains at $8.10, the maximum allowed by state law, which is a reason that the council had been considering reducing fire department or police department staff, to bring general fund expenses in line with revenues.
The budget as approved calls for a reduction of the beginning general fund balance from $75,000 on July 1, 2006 to an ending fund balance of $10,569 on June 30, 2007.
Dwight Varce was the only council member who voted against the budget.
Doug Woods, who was sworn in at the start of the meeting, abstained. Woods was appointed to replace Bill Troth who recently died.
"In respect to those council members who were present and worked on the budget, I would like to abstain," Woods said.
One potential revenue source for the general fund discussed at the council meeting would be a franchise fee on the gas utility. Also on the agenda for the Tuesday meeting was a 25-year renewal of the franchise agreement with Alliant Energy.
State law allows a franchise fee of as much as 7 percent. The cost would be itemized and passed along to the consumer. Deb Taylor, city clerk, estimated that the franchise fee would generate about $37,000 for each percent.
However, whenever there is a franchise fee, there cannot be a local option sales tax. There is a 2 percent local option sales tax on utility fees, 1 percent going to a pool to be divided among municipal and county entities and another percent for the school district. A franchise fee would have to be 2 percent to replace the revenue from the local option tax and above that amount to generate additional revenue.
Taylor suggested that if a franchise fee did eliminate the option tax, that the city consider compensating the school district. "They have the same financial constraints that we do," Taylor said.
"This may be a way to keep the fire department's staff," Ron Johnson, council member, said of a possible franchise fee. "When you reduce public safety personnel, there is a drop in public safety," he added.
Woods said he liked the fact that a franchise fee would allow the city to collect revenue from those who do not pay any property tax such as non-profit organizations.
"I am totally against a franchise fee. People are sick and tired of these fees," Varce stated.
Woods cautioned that a utility franchise fee in Des Moines is currently under legal challenge.
There will be a public hearing at the next council meeting, March 28, on renewing the natural gas franchise with Alliant Energy.