Council looks at roads, franchise tax at budget workshop


FORT MADISON – City officials have found a way to add to city road repair funds and talked again about the possibility of instituting a franchise tax among other issues at a city budget workshop Tuesday night.

The city had been earmarking $100,000 from the road use taxes to resurface city streets and were considering reducing that amount, but instead has actually increased the funding by 50% to $150,000 for residential streets this coming fiscal year.

City Manager David Varley said the city had budgeted for the purchase of a new street sweeper, but instead will lease equipment which will free up funds to keep working on city streets.

“We are going to lease purchase the street sweeper,’ Varley said. “I’m going to try and get as short of a lease as we can, maybe three years, because I don’t like to borrow money.”

The move reduced the budget line on the street sweeper from $245,000 that the city was going to pay cash for, to $75,000 for the lease purchase agreement.

Varley said that still provides a decent minimum working capital in the road use funds.

Water rate increase

The city also looked at what the water fund looked like without the annual 2% increase. Varley put together a 5-year outlook as to what the city’s water fund would look like if the city didn’t apply the 2% increase in fiscal year 2020-21, but reinstated the following four years.

The end result was a $289,000 decrease in the fund balance. Varley said the city has put more into expenditures in the fund because the city is behind in replacements of water mains in the city. The city water department is also looking at expanding capacity so additional water can be produced at the request of one of the industrial facilities on the west side. That projected cost of that expansion is between $1.2 million to $1.5 million.

Varley said water is a vital necessity and wants to keep balance high enough for emergencies and wants to keep it higher than most of the other funds.

“A deteriorating road is bad, but not as bad as not having water or having to boil water,” Varley said.

Vehicle replacement fund

Varley is also proposing a vehicle replacement fund where the city departments would essentially pay rent on their vehicles. That money would go into a fund at a rate that would pay to have the car replaced in a set amount of years, which varies by department.

“The beauty of it is it’s like financing a car. If you’re really frugal when you have a car paid for, you continue making that payment to yourself so when you want a new car you have that money in the bank,” he said.

He suggested the city start small with just the police department and then expand to other departments.

Also regarding the police department, city officials took a closer look at what it costs to keep a dedicated police investigator as a full-time position.

A five-year look had that position projected a cost of about $560,000 in salary and benefits, as well as training and a “hand-me down vehicle”

Lee County Economic Development Group

Mayor Matt Mohrfeld suggested at the meeting that the city bump the amount given to Lee County Economic Development Group in light of recent successes in education and growth.

“I would suggest that, if it’s possible, we look at elevating that from $25,000 to $30,000,” Mohrfeld said.

“It’s a $5,000 increase which would be 20% and I think it sends a nice message that we are rewarding them for their success. And hopefully it will also send a message to other investors we see the value, and hopefully they do.”

Bowker said she supported the additional money to LCEDG citing campaign information from voters who wanted more businesses to locate in Lee County.

Franchise Tax

Bowker also broached the franchise fee and said it was a tough discussion and suggested leaving things as they are until the next budget year and then revisit it.

Mohrfeld said he believes a franchise tax is on the books at 0%. Having that at 0% doesn’t surrender the LOST collected on those utilities. City Clerk Melinda Blind said the city had to provide Alliant Energy at least 6 months notice to start collecting the tax.

Councilman Mark Lair said last time the city discussed a franchise tax several industries and the Fort Madison Partners came out opposing the move.

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