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STAFF REPORT <br /> OCTOBER 13 , 1992 <br /> PAGE TWO <br /> ORDINANCE NO. 519 IMPLEMENTING A ELECTRIC AND GAS FRANCHISE FEE <br /> At the Public Hearing (held on August 24th) <br /> At the Public Hearing held on August 24th, the rationale for <br /> implementation of a franchise fee was discussed in detail. The <br /> discussion centered on the following: <br /> * Franchise fees are another form of taxation - acknowledgement of <br /> this has always been clearly stated in all written and verbal <br /> communications from the City. <br /> * Franchise fees, as opposed to general property tax, impose <br /> payment on all users of City services. <br /> * Franchise fees/user taxes raise revenue with less financial <br /> impact on the average valued home owner. <br /> * There is more measure of control over a user tax than a <br /> a property tax. Less energy consumption means less tax. <br /> If someone is on an extended absence from their home, their <br /> property tax is not decreased. <br /> * The franchise fee is not an allowable itemized deduction on <br /> Federal and State Income Tax returns. <br /> If the franchise fee was 4% the average residential utility <br /> customer's annual franchise fee payment would be approximately <br /> $40. <br /> Approximately 50% of those persons filing Federal and State <br /> Income Tax returns itemize deductions. A family of four with <br /> an annual income o 4I , iis wou d realize a tax-savings of $-10 <br /> if the franchise fewerp an allowable_itemized deduction. <br /> * Franchise fees would raise needed revenue to continue essential <br /> and resident requested services. At the maximum rate of 4%, a <br /> total of $277, 000 would be raised. In order to continue to <br /> meet these service needs, the City needs to raise approximately <br /> $155, 000 for budget year 1993 . <br /> * Wits - • - • - e of the Legislature of cutting promised <br /> (and much needed Local Government Aid - 1/3 of the City's <br /> budget) mid-year and after the City's budget has been <br /> finalized and the revenues established for the year, the City <br /> anticipates additional cuts to LGA in 1993 in the range of <br /> $100, 000-$150, 000. Implementation of a franchise fee would <br />