12-06-2004 Council Special Minutes

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MINUTES CITY COUNCIL DECEMBER G, 2004 valuation increases. Commercial properties with no valuation increase would see an approximately 2.3% decrease in their taxes. Li looking to the future, the Administrator suggested that there will be continuing increases in residential propeirty values, a steeper phase out of limited market value, an increase in the cost of police protection, and additional State budget woes. The Administrator thanked everyone for their attention, and noted that the City Council will consider adoption of the proposed 2005 Budget at a Public Hearing on December 15, 2004 at 7:30 p.m. lvlilan Moravetz, Allen Avenue, asked about the funds the City collects from its franchise fee on electrical service. The City Administrator noted that these funds are applied to the City's Infrastructure Fund for its streets program and trail system. He noted that the implementation of the franchise fee has allowed the City to fine up 1nfi~astructure Fund dollars for General Fund needs. Moravetz asked if the fi~anchise fee was never specifically intended to cover the cost of a fall street sweeping. The Administrator replied that these funds were never specifically intended for that purpose..However, t1~e use of the franchise fee for infrastructure needs frees up other City funds for purposes such as the fall street sweeping. Moravetz expressed concern that Xcel Fnergy is charging sales tax on the fi~anchise fee. The Administrator reported that he has contacted Xcel Energy aboi~it this, and it is their position that the State requires sales tax to be collected on the franchise fee. The Administrator indicated that he has asked Xcel for appropriate documentation. Blesener noted that the City is required to charge sales tax on its water service charge. Fahey pointed out that there is the issue of how long the City will continue to charge the franchise fee. "1'he Council indicated at the time it was implemented that it would take a look at the issue after a few years. it was noted that while property taxes provide for an income tax deduction, the franchise fee does not. Blesener indicated that the CounciPs intent was to look at the fi~anchise fee after three years. The City Administrator noted that the franchise fee is a larger burden on commercial and multi-family property than single-family residential. Replacing that fee with increased property taxes will result in a heavier burden on single-family residential properties. ,Fahey noted that Little Canada has the lowest per capita spending of all the Ramsey County cities. Therefore, the City will not be able to 4