Minutes - Council - 09/28/2021 - Laserfiche WebLink

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Mayor Kuzma stated he will not be supporting this as he cannot support raising the levy to almost 18%. He added previous Councils have always had reductions in the levy. He noted the franchise fee was never given a full trial, and he does not believe people were complaining about it. He noted the levy will not fully fund roads, and the City will have to dip into its reserves which will challenge the City’s bond rating. Councilmember Heineman stated there is misrepresentation here. He added, from 2022-2023, under the franchise fee, there would be 2 years of fully funded roads, as the franchise fee grossly underfunded roads for all but 2 years. He noted it is a misrepresentation to say the City is underfunding the levy, when there would be a $276,000 deficit under the franchise fee model. Councilmember Heineman stated last year, with the 5.4% general levy increase, residents saw a 20% increase in taxes based on franchise fee, for a total increase of 25%. He added, looking at these numbers, the proposed plan is better as it establishes a long-term plan to pay for roads. Councilmember Riley stated, with regard to the long-term plan, continued growth in the tax rate is built in for all future years. He added he is uncomfortable talking about raising taxes. He noted he supported getting rid of the franchise fee but only if the funds were replaced, but only 84% of the funds are being replaced. He noted he cannot support building in tax increase assumptions. Councilmember Heineman stated, from 2014-2021, there has been a 7.5% average annual increase because of the growing tax base. He added this plan is cheaper and more effective, which is in line with the City’s goals of financial stability and effective organization. Councilmember Specht thanked Finance Director Lund and City Staff for the hard work on the budget. He added this is a more equitable and transparent way of funding roads, and he sees it as a good compromise. Mayor Kuzma stated it was agreed during work sessions that the City Council would do a thorough review of the franchise fee and other road funding options. He added, however, there was a motion to eliminate the franchise fee without a full review. He noted the City Council never went through all the options. Councilmember Heineman agreed, adding the City Council had agreed to review the franchise fee, but it was pushed back from work sessions repeatedly, until it was too late to do anything. Councilmember Howell stated she concurs with Councilmember Heineman’s recollections of franchise fee and discussions. She added the former mayor had stated that the franchise fee is a tax that people are paying but they don’t know their tax rate. She expressed her support for Council Member Musgrove’s motion. She noted residents need to understand what they are paying. Councilmember Musgrove stated she supports the idea of having funding from taxes that is dedicated to roads. She added, to Councilmember Heineman’s point, the franchise fee did not fully fund roads and would have to be increased. City Council / September 28, 2021 Page 8 of 18