Minutes - Council - 07/27/2021 - Laserfiche WebLink

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of $172,000 had a tax increase of 40%, while a home with a value of $450,000 increased 6.6%. She noted the franchise fee simply disguised the tax increase, and she does not support that, as it is not fair for some neighbors to pay higher taxes. She noted she will be supporting the Ordinance. Councilmember Heineman stated, at the Council’s last meeting, he commented that the franchise fee is a regressive tax. He added residents should pay taxes that are proportional to their home value, which is a regressive tax. He noted $300,000 is the breaking point, and homes with a value of $336,000 would pay the same as the franchise fee, if a 15% tax levy is added. He noted the vast majority of residents pay more with the franchise fee, because their home value is less than $336,000. Councilmember Heineman stated It is inaccurate to categorize this as a big tax increase since the franchise fee for residents with lower value homes was already higher. He added he agrees that the franchise fees should be removed and added to the tax levy. Mayor Kuzma stated assessments were up to 25%, which could be a $6,000-8,000 assessment on a lower value home. He added the franchise fee is a more stable source of income for road improvements. Councilmember Heineman stated it is a misrepresentation of the franchise fee to say that it is a stable source of income, as all but 2 years from now until 2030 will be in the negative, and the City will have to dip into reserves. He added, however, overall total funds will be generated and increased as the tax levy grows. He noted a 15% tax levy will result in a $1.8 million surplus by the end of 2030 as opposed to a $712,000 deficit if the City stays with franchise fees. Councilmember Specht stated he agrees that the franchise fee is better than assessments, but the tax levy is what is best for Ramsey, as it is more transparent, equitable, and provides flexibility in the budget. He added 70-80% of the City’s homes would pay more from the franchise fee than the tax levy. He noted there has been fear mongering that the levy would lead to cuts in Police and Fire, but that is not something the City Council would ever allow to happen. He stressed the importance of doing what is best for the City, and he believes that is the tax levy. Councilmember Riley stated the franchise fee was set up to be equal and easy to understand. He added people need to know that a large increase will be required to cover it. Councilmember Woestehoff stated the numbers we are talking about are fluid. He added Councilmember Heineman mentioned $300,000 as being the breaking point, but the new version of a spreadsheet attached to the meeting agenda indicates that the break-even point is approximately $250,000 in market value. He noted there is not enough data from the County to indicate what the tax levy will cost taxpayers, and there are no specific answers for coming up with a replacement plan although assessments have been discussed. Councilmember Woestehoff stated it is not appropriate to replace a $2 million budget gap with a tax levy. He added he has not heard anyone other than Councilmembers say that a levy is a good idea, and there is a discrepancy about the break-even point. He noted residents have expressed concern about taxing non-profit organizations and churches, but there is a marginal impact on these City Council / July 27, 2021 Page 8 of 25