Agenda - Council - 12/17/1991 - Laserfiche WebLink

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I i I I I I I I I I I I I CASE FRANCHISE FEES By: Ryan R. Schroeder, City Administrator Background: Recently at the Budget Committee meeting, Staff suggested the option of levying a franchise fee or a gross earnings tax against public utilities, namely Midwest Gas and Anoka Electric Cooperative, as a means of compensating the City for increased cost accruing as a result of the utility operations or as a means of raising revenue. There arc several cities in Minnesota that currently have either gross earnings tax or franchise fees and there are others that have been considering such, as of late. It is my understanding that in the Metropolitan Area, currently utilizing one of the two are: CITY ~ GAS Coon Rapids 4.0% 4.0% Lake City 2.5 % Minneapolis 6.5 % 6.5 % St. Cloud 3.0% 3.0% St. Paul 8.0% 8.0% Sleepy Eye 5.0% 2.0% South St. Paul 3.0% 3.0% Waseca (Residential) 5.0% 3.0% Waseca (Commercial) 3.0% West St. Paul 5.0% White Bear Lake 1.5% Winona 4.0% STEAM HEAT 5.0% I have contacted both Midwest Gas and Anoka Electric Cooperative. Currently Midwest Gas has 3,145 residential customers, 137 commercial customers and four industrial customers in the City of Ramsey. For the month of October 1991 their gross revenues for residential customers were $87,537.32, for commercial $16,452.48 and for industrial $90.45. I have not yet received like information from the electric company. Given the above, assuming that October is a normal month for gas usage (I'm not at all certain whether or not it is), a 3% gross earnings or franchise fee tax would result in a revenue of $37,469 and 2% would raise $24,979. I would imagine that this tax assessed upon the electric utility would raise similar annual revenues. Attached for your consideration is the gross earnings tax ordinance of the City of Coon Rapids which was in effect through 1991 prior to a recent change in the amount from 3% to 4%. Recommendation: I ! Staff recommends preparing a draft ordinance of a gross earnings tax for consideration by the Budget Committee. Council Action: Motion to direct that the Budget Committee consider a public utility gross earnings tax. I I '1 Review Checklist: City Administrator Finance Officer CC: 12/17/91