Agenda - Charter Commission - 08/27/2020

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Property Tax Property taxes are a common way for cities to raise general revenue. Most cities within our sample use property tax revenue as a way to fund their road projects. Property taxes are a reliable source of revenue however largely inadequate to cover total road funding costs, dependent on short term priorities, and politically unpopular. Bonds Bonds are a popular method to fund road infrastructure projects in our city pool. Most cities used bonds as a supplemental, not primary, income source. The interest incurred by bonds often places future burden on property tax funds, which are used to pay the interest. Other sources The most common other source that cities in our sample used were MSAS funds. All of the cities in our sample were eligible to designate up to 20% of their roads for MSAS funds. Other funding sources also included national grants, international funding, the Local Road Improvement Fund, and Host Community Funds (fees for using a city's landfill). Given our findings, the City of Ramsey is well situated in their current reliance on special assessments for approximately 25% of projects and we would not recommend increasing this, as cities have expressed overall interest in keeping these rates at this level. Multiple cities have appreciated the diversification, stability, and flexibility offered by franchise fees. Though we did not hear of any cities having trouble with introducing the fee politically, we did hear from numerous sources that there is a high level of importance placed on public engagement efforts. Additionally, our interview with the League of Minnesota Cities representative mentioned concern of growing political unpopularity of franchise fees. Partnership with League of Minnesota Cities and other cities that have successfully passed the franchise fee would be a useful tool as the City of Ramsey considers the political feasibility of passing franchise fees. Innovative funding techniques Interviewees also discussed several innovative funding techniques that they are interested in seeing added to Minnesota municipalities road funding toolbox. The policies - street improvement districts and a city wheelage tax - would help to expand the ability of cities to raise dedicated road maintenance revenue. Street improvement districts would grant cities the authority to collect fees from property owners within established districts to fund road maintenance projects, similar to the State's storm sewer improvement districts. Legislation for the funding tool passed the Minnesota House in February 2020 (HF 1095) but its companion has not yet been scheduled for a hearing in the Minnesota Senate (SF 1271) (League of Minnesota Cities, 2020). The wheel tax policy would allow Minnesota city to receive wheelage tax revenue. Currently, the wheelage tax authority lies with Minnesota Counties, but the proposed legislation would enable a $10 surcharge on license tab and title transfers to be applied back to cities. The legislation has been introduced in both the Minnesota House and Senate however to this date no further actions have been taken. Importance of public opinion Many of the cities that were interviewed and surveyed discussed the particular methods they use to engage the public and secure support for road improvement funding mechanisms. Considering the previous unsuccessful attempt to pass franchise fees in Ramsey in 2019, the city may find 12