The Clinton Herald, Clinton, Iowa

February 20, 2014

Franchise fee denied

By Amy Kent Herald Staff Writer
The Clinton Herald

---- — CAMANCHE — A finalized budget is in the books for the Camanche City Council, but the end product is not what council members or citizens originally anticipated.

Camanche residents swarmed the chambers Tuesday to voice their opposition to a proposed franchise fee on gas and electric services that passed on Feb. 4 with a 3-2 vote, that would have erased nearly 95 percent of a $110,000 budget deficit the city is facing.

Seeing the outpouring of citizens concerned with the effect of a franchise fee, Councilman Mike McManus withdrew his support of the $95,000 revenue generator, and instead encouraged the council to reconsider enacting the fee.

“Why can’t we take the $110,000 out of the general fund reserves and then take the franchise fee to a referendum after the budget’s been approved?” McManus asked. “It gives us all more time to study it, look at it and assess it. When we’re looking at only 10 percent of our reserve compared to an extremely upset community, it’s a big difference.”

McManus’ suggestion also included taking the possibility of a franchise fee to a referendum vote after Mayor Ken Fahlbeck introduced the idea for the first time at Tuesday’s meeting.

City Administrator Tom Roth advised the council against removing the franchise fee from the budget and warned that by using the city’s general fund reserves to make up the difference, they would end up deficit-spending for operational expenses, a financial situation that will end up hurting the city in the end, Roth said.

He also added that by not approving the budget as originally anticipated, with the 2 percent franchise fee in place, the city would end up submitting an unbalanced budget to the state.

“I think it’s terrible public policy,” Roth said. “I think deficit-spending in your operating budget is bad policy.”

Roth wasn’t the only one to oppose McManus’ suggestion to remove the franchise fee from the budget, but with a 3-2 vote, councilman Trevor Willis and councilman Paul Varner were a part of the minority.

Varner’s concerns stemmed from the option of the referendum and the likelihood of it failing in the community vote. If residents deny the additional fees, the city would be at a crossroads with how to balance future budgets plus a $110,000 loss to the general fund reserves.

“If it gets sent to a referendum and gets voted down, then what?” Varner asked.

Willis also agreed that sending it to a referendum wasn’t in the best interest because if the franchise fee was denied, then the city’s attempt at balancing future budgets will become more and more difficult as state commercial property tax rollbacks are implemented and other expenses continue to rise.

As a strong proponent for the franchise fee since the beginning of the budget discussions, Willis was disappointed to see it fail and warned his fellow councilmen that the decision would hurt the city financially in the long run.

“The issue isn’t this year,” Willis said. “The issue is moving forward and so to delete it now, you’re losing out on that revenue that would potentially help our future.”