In March Des Moines residents will decide whether to raise franchise fees in order to pay for a franchise fee settlement.
City leaders consider the plan to be the “least of three evils.”
Des Moines owes taxpayers $41,000,000. There are three options to pay it off; none of them are particularly appealing.
“The first option is to reduce (city) services,” said councilman, Skip Moore, “that means lay people off; that’s not acceptable.”
Leaders say they’ve already cut more than $28-million and reduced more than 300 jobs from the new budget. Further cuts hit services considered urgent or projects already under contract.
Des Moines could raise property taxes, but that burden falls heavy on homeowners.
“40% of the properties in Des Moines are tax exempt,” Hensley said, “they don’t pay property taxes.”
So, it will be the third option that gets held up for a vote in March: a 2.5% increase in the city’s franchise fee.
“Anybody with improved property in the city,” Moore said, “anybody with a building who buys utilities will be paying for that so it spreads it out over a larger percentage of the property owners.”
For the average homeowner, the increase is roughly $40 a year for seven years.
The costs could potentially be offset slightly be new revenues, but don’t count on any refund from the Grand Avenue bridge project.
The city will fine Jenco Construction $5,000 per day for each day it’s missed its September 27th deadline (roughly $365,000 total), but Jenco will likely dispute that claim, and the bridge funds were borrowed to begin with.
“If the project comes in at a smaller cost than is anticipated,” said city engineer Jeb Brewer, “that’s really less money that we borrowed, so it’s not like there’s cash sitting on the table.”
So referendum it is. March 4th. A new franchise fee to pay for an old one.