Budget Workshop
                                             City Hall, Cherokee, Iowa
                                           February 11, 2010 – 5:00 P.M.

Mayor Murphy called a budget workshop to order on this date.  Present:  Council Members Burkhart, Mallory, Morrow,
Stieneke, Administrator Eikmeier, Clerk-Treasurer Taylor.  Absent:  Council Member Peck.

A motion by Stieneke, seconded by Burkhart, added an item to the agenda to approve a new class “E” liquor license for
Hy-Vee Drugstore.  Motion carried.

A motion by Burkhart, seconded by Morrow, unanimously approved a new class “E” liquor license for Hy-Vee Drugstore. 

The council continued review of the 2010-11 budget.  Administrator Eikmeier pointed out that there are no major changes in
the Road Use operations budget from what was presented last week by Jim Agnitsch.  The Street Improvement Project fund
provides the city’s share of funding for the Birch Street bridge replacement as well as reconstruction of W. Cherry St. from
the railroad tracks to N. 11^th.  The engineer’s estimate is $1,900,000 and this budget reflects low-interest bond funds in the
amount of $1,795,000, as well as funding through special assessments.  The Cherry St. project would include the replacement
of water lines, sanitary sewer lines where necessary and the installation of storm sewers.  In the Water Utility budget,
breathing apparatus used in a possible chemical leak was briefly discussed.  The Administrator said that all options would be
studied and any decision would need council approval before proceeding.  In the Sewer Utility budget, $20,000 was added to
insert a liner in the sanitary sewer line behind the library. 

The council discussed pros and cons of implementing a franchise fee on gas and electric utilities.  This would provide an alternate
revenue source to help bring the General Fund reserve back up to a comfortable level and possibly go toward property tax relief. 
The council reviewed a report showing cities of similar size that own their utilities and the amount of money from those utilities
used in their General Fund operations.  These amounts range from $74,000 to $640,000.  In the one city shown that doesn’t
own their gas utility, they have a 5% franchise fee.  The council was reminded that if a franchise fee is implemented, the 1% local
option sales tax is removed from the utility bills.  A 3% fee (net 2% to the customer) would generate approximately $240,000,
with a proposed split: $132,000 to General Fund, $80,000 to Street Improvement Projects and $28,000 to Road Use Equipment. 
A 2% fee (net 1% to the customer) would generate $160,000 with a proposed split: $52,000 to General Fund, $80,000 to Street
and $28,000 to Road Use Equipment.  The council was split on whether to proceed with a franchise fee.  Burkhart and Peck are
in favor of 3%, but Burkhart would go with a 2%, as this would be a step in the right direction.  Mallory would prefer not to
implement a fee, but may agree to a 2%.  Stieneke was opposed and Morrow was undecided.  The Clerk will bring back final
numbers for council review at the next regular meeting of February 23.  At that time the council will schedule a public hearing
on the budget for March 9. 

On a motion by Burkhart, seconded by Mallory, the meeting was adjourned at 6:35 p.m.  Motion carried.

 Mark Murphy – Mayor

ATTEST:

Debra Taylor, ICMC
City Clerk-Treasurer