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.