Minutes - 2009/08/10 - Laserfiche WebLink

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Mounds View City Council August 10, 2009 Regular Meeting Page 4 • Clerk-Administrator Ericson stated staff will calculate the exact maximum increase allowed by the Charter and present it at second reading. Council Member Hull asked why a yearly sunset provision was placed. Clerk-Administrator Ericson stated the original approval in 1992 was for 5 years and when it was re-approved, an annual adoption was added so the Council can review it each year. Council Member Stigney stated the annual sunset provision started so each Council could determine whether it was or was not needed. This fee was started to off set money going directly out of tax payer's pockets for tax exempt properties and, unfortunately, became relied on as another revenue source. He stated support to charge the maximum allowed by the Charter. Council Member Hull asked if business owners and the Chamber of Commerce disagreed with the franchise fee in 1992. Clerk-Administrator Ericson stated some business owners, but not an overwhelming number, did speak in 1992 against the franchise fee. Finance Director Beer explained the City views franchise fees as just one piece of the entire "package" that includes water and sewer rates, overall tax levy, and cost of business licensing. He advised that when looking at that "package," it is reasonable to do business in Mounds View. . Council Member Hull noted this is a regressive tax at a straight percentage so it may impact smaller businesses more than larger sized businesses. He asked what service taxpayers receive for this fee. Finance Director Beer stated it off sets the costs for fire and police protection, the park system, and maintaining a business code. Mayor Flaherty stated he voted to reduce the fee to 3.75% after business owners raised the issue that the fee was to have a sunset date. He noted when the City of Minneapolis imposed a liquor tax to build the Metro Dome, it was to have a sunset date but has never come off the books. Mayor Flaherty pointed out that Mounds View residents pay a franchise fee on water and sewer billing. Finance Director Beer estimated that slightly more in franchise fees is paid by the business community than by residents. Finance Director Beer noted the Street Plan relies on funding from the franchise fee so once the Street Plan has been completed, it would be the appropriate time to phase out the franchise fee. Council Member Stigney stated the biggest user of electricity is Medtronic and they also receive the biggest tax break but because of the City's small-sized business community, residents pay a larger portion. He noted the amount paid by the taxpayers is a direct offset to levied taxes for City services they receive. Council Member Stigney pointed out that taxpayers receive a better break if the fee is increased to where it should be and if the fee is not needed, then the levy should be reduced. Council Member Mueller stated a regressive fee can be described as something that effects everyone in the community equally, including nonprofits, and since all use electricity and pay a