Among the many considerations the Cherokee City Council is pondering while formulating the fiscai budget for 2010-2011 is a proposed new franchise fee on electricity and gas rates.
Faced with declining population resulting in lesser tax revenues, the City is proposing the franchise fee to provide a revenue stream that would help alleviate the serious budget crunch most small, rural communities face at this time.
Currently, there is a 1-percent local option sales tax (LOST) on electricity and gas in Cherokee that generates an estimated $80,000 annually, with those funds devoted to streets and infrastructure needs.
In an effort to counter the budget shortfall, help restore the City's cash reserves, help replenish the City's streets fund, and to help provide property tax relief, the City is proposing an additional 2-percent franchise fee hike for a total 3-percent net that would double the generated revenue to an estimated $160,000 per year.
These additional monies would then be dedicated to replenishing the cash reserve, Street Equipment Fund, and the balance to property tax relief, according to City Administrator Don Eikmeier. Cherokee's cash reserves should total approximately $100,000 for a City its size.
The impact for property owners would be an estimated $2 on a $100 gas/electric bill, said Eikmeier.
Because of budget shortfalls across the board and the State's 10-percent ATB cuts last October, many Iowa cities have been negatively impacted.
herokee has spent down its cash reserves and there are no monies in an emergency fund if something catastophic were to occur.
The Council has set 7 p.m. March 9 for the Public Hearing on the proposed 2010-2011 budget. That date will be finalized by the Council at Tuesday's regularly scheduled meeting. The budget must be certified to the County Auditor by March 15.
The Council also will enter closed session Tuesday night for on-going labor negotiations with the Policeman's Association, and the I.U.O.E. Union.