City looking at raising tax levy, implementing franchise fees to meet budget

As they finalize the City of Glenwood’s budget for the 2017-2018 fiscal year, city council members are taking a serious look at raising the city’s property tax levy and implementing franchise fees on MidAmerican Energy and Black Hills Energy customers as a means of generating revenue needed to meet an annual operating shortfall of around $300,000.

The city has been hindered by a general fund operating deficit for the past three years and it’s the belief of financial consultant Clint Fichter that the shortfall can’t be eliminated without additional revenue being collected.  Fichter said in January the city is doing a good job of keeping expenditures in check – there’s simply not enough revenue coming in to cover the day-to-day costs of operating the city.

The need for revenue was the focus of discussion at City Hall during a Feb. 14 public hearing on the proposed franchise fees.

“The only (immediate) option is to increase revenue through franchise fees and property taxes,” Mayor Brian Tackett said.

Tackett and members of the city council noted the city hasn’t raised its tax levy since 2009. The current rate of 13.58 (per $1,000 valuation) has been in place for two years.

Craig Florian, the veteran member of the city council, suggested former council members and administrations shoulder blame for the city’s current financial situation, noting franchise fees are common among municipalities in Iowa, but have never been pursued previously in Glenwood.

“It was overlooked,” Florian said. “Former councils and administrations were less concerned about fixing up the library, the police station and things like that.”

Tackett said difficult decisions have to be made for the city to address its financial woes.

“The city has a lot of obligations it’s trying to catch up on,” he noted.

City officials are considering setting the franchise fees at 3 – 5 percent.  City residents would pay the fee on their monthly utility bills from MidAmerican Energy and Black Hills Energy. Fichter said the franchise fees (at 5 percent) would generate about $215,000 in annual revenue for the city.
Tackett said franchise fees are flexible and can be adjusted or removed in the future at council discretion.

Council member Jessie Lundvall said the city is considering the franchise fees to “get the city back in the black, not to establish a savings account.”

Council member Dan McComb has a different view, however. He believes the franchise fees will be permanent once approved.

“If something is implemented, I think it will never come off,” McComb said.

Council members are expected to take their first vote on the franchise fees at their next meeting, Tuesday, Feb. 28.

The city will also be releasing and publishing its proposed tax levy and budget estimate for 2017-18 in the coming days. A public hearing on the city’s 2017-18 budget is planned for March 14, one day before it must be submitted to the state for certification.