Minutes - Council - 12/14/2021 - Laserfiche WebLink

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Finance Director Lund explained the bill with the discontinuation of the franchise fee. Mayor Kuzma commented that he will not be supporting tonight’s budget. He recognized it is an important and needed document but stated a $168 a year franchise fee was in place. Now it has been changed and been moved to the levy. He noted for a few houses, it will be reduced a little bit but the tax capacity, inflation has pushed the houses to be around 7% so the 18% increase is based on the new house value. If inflation continues, the houses are going to climb again and the 18% will not go away but will continue year after year to be able to fund the roads. Mayor Kuzma believes it is a poor way to handle street funding and is unhappy with how it is turning out. He will wait to see how it plays out but was more in favor of the franchise fee because it was constant. As the City starts to add houses, his opinion is that the franchise fee could have been lowered, noting that people knew what they were expecting, now it is wide open so he will be voting no. Councilmember Woestehoff agreed with the things the Mayor said; however, not passing a budget and being $2 million short is not something he is willing to do. He agreed that roads are a big problem for the City, noting the current solution in the budget is $300,000 less than was invested in the roads last year and is costing us more. He stated it is harder for everyone to tackle such a large increase even though it does offset the franchise fee. He can understand that a lot of houses will be paying more, a lot of houses will be paying less. He thinks there are parts of the budget and levy that everyone on the Council has an issue with; however, in the spirit of working together and getting something done, he feels he has to support it because he doesn’t want Staff to have to worry about a $2 million deficit in January. Councilmember Musgrove asked Finance Director Lund about road funding in the past, whether the City funded 75% and assessed 25%, and then the franchise fee was switched. She also asked if the debt levy right now is covering the 75% that the City has covered. She noted as the years go on, the debt funding for the roads is going to go down. Councilmember Musgrove asked Finance Director Lund to speak to how that will potentially impact the General Fund and the Road Maintenance Fund. Finance Director Lund referenced a slide in her presentation that depicted the debt, noting it listed four years of road debt that are ten-year bond issuances. The first one was in 2015 and the last year it will be levied will be 2025 and the next four respective years. Then, when they fall off it and will reduce the debt levy portion. Finance Director Lund commented that Councilmember Musgrove had asked about the road funding and explained that prior to the franchise fee, debt was issued and that was put on the property taxes for the respective debt levies that were just mentioned. The 25% was assessed to the respective property owner to pay. Last year, the franchise fee was used, there was no special assessment or debt issued, and the roads were covered by the franchise fee. For 2022, the special assessment is gone, the franchise fee is gone, and the issuance is gone. It is all encompassed within the property tax to fund the roads. Councilmember Musgrove highlighted that as those debts are gone, it will help bring down the levy because there will be a dedicated road funding source which she felt was an issue with the franchise fee. She stated a dedicated source for road funding was needed so instead of issuing debt, the Council at that time voted for the franchise fee. She thinks it is more transparent to have City Council / December 14, 2021 Page 7 of 19