ILLEGAL TAX: City Votes To Increase Franchise Fees

The City of Des Moines owes its residents millions of dollars for illegally raising franchise fees.

On Monday, the city council decided the best way to return that money is to raise franchise fees, again.

The city council wants you to pay for your own refund. But first they need you to vote in favor of raising fees on yourself.

In 2004, the city was sued by Lisa Kragnes after she noticed the franchise fee tax on her Mid-American energy bill.

Instead of stopping the tax, the city continued to collect it until a judge finally ruled against them in 2009.

Earlier this year a judge ruled the city owed its residents $42-million in franchise fee refunds. The attorneys who argued the case will split $7-million.

The city approved bonds to pay for those refunds but now must find a way to pay off the bond.

City leaders say it has just three options to pay for that refund:

  • Cut city services with the biggest cuts coming from police and fire protection
  • Raise property tax rates for 20 years
  • Raise the franchise fee for seven years

Monday evening, the council voted unanimously to pursue that third option, temporarily raising the franchise fee.

They say unlike the other two options, it doesn’t jeopardize the safety of residents and it pays off the bonds faster and more cheaply.

“This is the fair and best thing to do for the tax payers of Des Moines. It will save them money of all the options in front of us,” council member Chris Coleman said.

But for the council plan to move forward voters must approve it.

Des Moines residents will go to the polls on March 4th to vote on a referendum on raising fees on themselves.

According to the city’s finance director, the average citizen will save $171 by raising their franchise fees instead of their property taxes.

The city still hasn’t finalized how much individual utility customers will be refunded or how they’ll process the refunds.

9 comments

  • Patty

    So, how is it suppose to save us money? We already paid it illegally once. Now the city is taking out a bond to refund us the money. So, to pay the bond back, we are going to get the franchise fee raised, which means we are paying it again.

  • Jeff Brown

    •Cut city services with the biggest cuts coming from police and fire protection

    I have an idea.. why don’t we start cutting at the top of city leaders before they cut fire and police??..

  • Troy V

    The only people that got any $$$ out of this deal is the lawyers who brought the suit against the city (to the tune of $15 million if I remember correctly. Taxpayers will get zero (you’ll get your refund, then you’ll pay that same $$$ back to the city over the next 7 years).

    Common sense should have been used by the judge and he should have ruled that yes, the city broke the law (at the time, it’s since been changed to where those fees are legal). However, since a city is not a business, it would be moot to force the city to refund money back to those that have to pay the judgement. Therefore the judgement should have been for $0 and the ruling should have been the same (the city was in the wrong), so that it’s on the books for future cases against other cities.

    Anyone who thought they were actually getting $$$ out of this must be living in a cloud or on another planet. Just where do people think that cities, counties, states or the federal government get their money???

  • mongo

    What a bunch of geniuses you all are, it’s a city government, the taxpayers are paying this no matter how you slice it. If you want to blame somebody, blame the idiot who sued, she cost the taxpayers of Des Moines an extra $7 million in attorney’s fees.

  • Troy Hendrickson

    So basically, when all is said and done, the tax payers will actually end up paying even more after interest, and some lawyers made an easy $7 million.

    It must take a “special” kind of sucker to live in Des Moines.

  • mark

    des moines is definetly one of the most crooked cities around you almost hate to tell people where you are from may be christine hensley should be the first to go

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