Big Lake Tries Hard to Justify Franchise Fees

November 16, 2014 at 3:05 pm 1 comment


By Andrew Richter

Folks we can’t just laser focus on the Crystal, New Hope, Golden Valley area. I’ve been studying the “Northstar Corridor” and will have some posts on that as the year winds down.

Recently, I had a friend move to Big Lake and he asked me to look at some of Big Lake’s documents. I hopped on their website this morning and found an article on their city website justifying the implementation of franchise fees. You remember franchise fees right? In case you missed it, franchise fees are a tax charged to utility providers who in turn pass of the tax to their customers. And since we have no choices on who provides our utilities, we have no choice but to pay these fees. Now, we’ve talked several times about franchise fees over the years and I’ve found this “new tax” idea is gaining acceptance among city councils. The citizens of Big Lake have become the latest victims.

Their finance department has devoted an entire page to justify it. The beginning is laughable;

Like many other cities, Big Lake faced some significant challenges while developing the 2014/2015 Budget.

Is there a year a city doesn’t say that?

With increasing debt payments and a significant shortfall in the general operating budget, the City was facing its largest tax levy increase to date.

Let me translate that; You’ve had increasing debt payments due to too much borrowing and the city doesn’t want to make cuts so they are trying to figure out how get more revenue.

With concerns about the anticipated increase and the resulting effect on our already-struggling business community (which are taxed at a much higher rate than residential property owners), it was determined that the City needed to identify a more equitable way to generate revenue.

So you are trying to figure out a way to spread the misery equally.

A number of options were discussed, but the City ultimately decided to adopt a Franchise Ordinance which would allow the City to charge public utility providers for the continued use and maintenance of City-owned Right of Way. The fees are charged to utility providers, who pass the fee along to their account holders.

Of course their customers are you!

While many may feel that Franchise Fees are simply another form of taxation, this alternate method of revenue collection will impact more than just tax payers. Those that are typically exempt from property taxes but still benefit from essential City services, such as renters, non-profits, and schools will all pay the same fees.

Yes it is another form of taxation and their reasoning couldn’t be more wrong. Rental property is taxed and the renters are paying property taxes, they are simply paying them indirectly through their rent. Property taxes are built in the rental price. Non-profits like churches are now going to be taxes, so you should feel good if you’re an atheist. Schools are tax-funded so your tax dollars so we will now be taxing your taxes.

I can’t understand why there isn’t more opposition to this. I know there are some who don’t care how much we’re taxed and will justify any taxing and spending but I find this tax reprehensible. Renters are often poorer people or seniors yet the city is basically admitting that they are targeting them to pay more taxes. Where are the advocates of the poor?

Taxing schools is absolutely unforgivable. Just think some of the tax dollars you are sending to your schools will now be diverted from the classroom into paying taxes to the city! Where are the education advocates? Where are the teachers unions? If the state was “cutting education” or ‘diverting money somewhere else” these groups would go crazy! So where are they now?

This “idea” continues to grow. Golden Valley and Plymouth have adopted franchise fees and my guess is that with all the rentals in New Hope it will only be a matter of time before they consider it. If your city has franchise fees you need to work to remove them. If your city doesn’t, consider yourself lucky but keep your eyes on this issue. Cities are notorious for copying so look for city staffs to be pushing this everywhere.

Big Lake Finance Page 

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Entry filed under: Agenda 21, City Government, Mayor, Taxation. Tags: , , , , .

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1 Comment Add your own

  • 1. james p swanson  |  November 21, 2014 at 2:10 pm

    i MENTIONED TO SOME MEMBERS OF COUNCIL WHEN ALL THE BUILDING WAS GOING ON TO TRY TO GET A FEW MORE LARGER HOMES WITH MORE VALUE AS A WAY TO GET MORE TAXABLE REVENUE ! LIKE MAKING LARGER LOTS A REQUIREMENT IN SOME NEIGHBORHOODS AND REQUIRING MORE TREES AND NATURAL GREEN SPACE ! WHICH IN TURN WOULD REQUIRE LARGER MORE EXSPENSIVE HOMES TO BE BUILT TO AFFORD THE REQUIREMENTS BUT IT FELL ON DEAF EARS !

    Reply

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