Tri States Public Radio Staff
Vote on Franchise Agreements
Mon August 5, 2013
Preview : Burlington Special Election
Burlington residents must decide whether to help the city's checkbook or their own.
They will go to the polls on Tuesday, August 6 to vote on a pair of franchise agreements with Interstate Light and Power, whose parent company is Alliant Energy.
The city council has already approved the agreements, but a petition drive led to the public vote.
Former Burlington Mayor John Sandell led the petition drive.
He opposes the agreements because they include 3% franchise fees on both gas and electric bills.
"It's hiding under the name 'fee'," says Sandell. "I realize the legislature did that, but it is really a tax. It is a tax on your electricity and your natural gas usage."
The city wants to use the revenue from the franchise fees to balance its roughly $49-million budget for the current fiscal year.
Sandell says the city council should have cut spending instead of implementing the franchise fees.
“There are still millions of dollars that can be looked at so they can make surgical, scalpel-like cuts.”
City Manager Jim Ferneau says if the agreements are voted down, Burlington's current budget would immediately have a roughly 650-thousand dollar shortfall.
He says that will be filled by delaying the purchase of a fire truck and work on Cascade Bridge, reducing the budgets for economic development, sidewalk repairs and the public library, and cutting transit worker salaries, among other actions.
Ferneau says aldermen only considered the franchise fees to avoid a hefty hike in property taxes.
"They were looking at a $1.65 property tax (rate) hike," says Ferneau. "Instead of doing that, they presented a budget with a $0.75 increase and offset the other $0.90 with the franchise fee(s)."
The fees can remain in place for years, so future budgets could also be impacted.
Ferneau says an example of this is that the city wants to borrow money to repair streets over the next four years, with the franchise fee money being used to pay off the bonds.
Several members of the Burlington City Council have said they want the fees to be rolled back when they are no longer needed.
The 3% franchise fees would replace 1% local option sales taxes already on gas and electric bills.
The revenue from the sales tax is shared by several forms of local government, but the franchise fee revenue would only go to Burlington.
The franchise fee is also much-more far-reaching as organizations like Southeastern Community College and the Burlington School District, which are exempt from the LOST would have to pay the franchise fees.
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