The city of Cherokee could face a budget that brings down reserve funds to as low as $14,250 by the end of the fiscal year which runs from July 1, 2008, through June 30, 2009.
Deciding on a budget proposal to be published prior to a public hearing will need to be made on Tuesday, Feb. 26. During a series of workshops culminating with a special meeting on Tuesday of this week, the Cherokee City Council discussed the budget requests that were presented by heads of the general fund departments - parks and rec, police, fire, library, cemetery and city hall (the last being partly general and partly charged to fee generating departments). These general fund departments rely on property tax that is limited in amount under state law. City utilities operate through fees that are set based on the expense of operation. The street department also has a separate funding source.
The combined proposals presented by general fund department heads needs to be cut by about $140,000 to reach what has been referred to as an uncomfortably low ending fund balance, with hardly anything to use for unexpected expenses or loss of revenue.
"We have had an ending fund balance as low as $25,000. I wouldn't call that comfortable but we dealt with it," said Deb Taylor, city clerk/treasurer.
It was a consensus of the council that the department heads were not asking for excessive increases in their budgets. Salary increases are estimated at 3 percent, although that amount remains under negotiation for some employees.
Only two items of any significance remain under serious consideration in order to increase the ending fund balance.
Elimination of a part-time position from the parks and rec department would save about $13,000 and the city reducing the amount of money from the hotel/motel tax that goes to the Cherokee Chamber of Commerce and the Cherokee Area Economic Development Corporation (CAEDC) would redistribute an estimated $13,680, although this estimate was challenged at the Tuesday meeting.
The possibility of reducing the amount of hotel/motel tax designated for the chamber and CAEDC brought several members of the community to the meeting on Tuesday in support of the current distribution of that revenue.
Currently, the city retains 51 percent for general fund purposes. The city has to use that revenue in accordance to guidelines established by the Iowa legislature for the revenue on this tax, such as parks and economic development, but the qualifying city expenses already within the budget makes this a simple matter to accomplish.
The chamber tourism budget gets 25 percent, the Cherokee Industrial Corporation Incentive program gets 10 percent and the CAEDC gets 14 percent. Under an alternate distribution, the city would get 70 percent, the chamber tourism budget would get 10 percent and CAEDC would get 10 percent. No reduction for CIC was proposed because a long-term commitment had been made for a specific program.
The portion of the motel/hotel tax given to CAEDC is in addition to the $21,000 annually given directly by the city of Cherokee to CAEDC.
Chuck Wulfsen spoke on behalf of the chamber and CAEDC. He noted that the organizations support activities that bring tourism dollars into the community and improve the quality of life.
Mick Samsel referred to a handout that was distributed to council members that listed the projects over the last four years sponsored by the tourism committee of the chamber.
Mark Buschkamp, executive director of CAEDC, talked about booklets promoting Cherokee that have had wide distribution. He also discussed the storefront program that has provided an incentive for businesses to make improvements to the front of their buildings.
Kay O'Connor and Jomi Anderson also spoke on behalf of funding for the chamber and CAEDC.
The matter of eliminating a part-time position will be decided after discussing the matter with the department head at the next meeting.
The only firm decisions about what not to cut from the proposed budget were a decision not to cut a requested city hall phone system and a decision not to cut a requested parks and rec skidloader.
The council decided by consensus without a vote to keep the $2,500 update of a 20-year-old phone system. The council voted 2 to 3, rejecting a motion to eliminate the purchase of a skidloader from the budget.
The cost of the skidloader will be $5,000 a year for four years plus $10,500 transferred from the street department to parks and rec department (a transfer from a department not in the general fund to one that is) in order for the street department to purchase the park and rec's tractor and trailer. Without the purchase of the skidloader, the parks and rec would need to keep this piece of equipment.
Voting for the elimination of the skidloader from the budget were Greg Stieneke and Bob Leach. Voting against that motion were James Peck, Mick Mallory and Linda Burkhart. Therefore, the skidloader remains in the budget.
Stieneke noted that about the only place left to cut is in personnel.
"Greg is right that the only place to go from here is personnel, but no place is overstaffed," Taylor said.
Stieneke suggested consideration of a reduction in the fire department since towns of similar size do not usually have two full-time firemen, but he received no support for that suggestion,
"We've been through that before," Mallory observed.
The council will also need to decide on Tuesday how much of the Local Option Sales Tax revenue to use toward bond service reduction. (See separate article on upcoming bond hearing).