Coralville looking at franchise fee on utilities

CORALVILLE - Coralville utility customers would join the ranks of those paying a franchise fee for natural gas and electric service under a budget proposal for the upcoming fiscal year.

A 1 percent franchise fee is included in the proposed budget for the year that starts July 1. The fee would generate about $250,000 a year, City Administrator Kelly Hayworth said.

It would be an alternative to increasing property taxes even more than planned, Hayworth said.

The City Council “viewed the franchise tax as one option to minimize the impact,” he said.

Iowa City recently approved a 1 percent franchise fee, set to take effect June 1. Part of its appeal to city officials is that it can be collected on tax-exempt entities, like non-profit organizations.

A public hearing on Coralville's budget is scheduled for March 9, with the council set to vote on it that night, too.

The proposal includes a general fund budget of $14.7 million, up 2 percent from the current year.

It also calls for a tax rate of $13.53 per $1,000 of taxable value, compared with $13.42 this year.

At that rate, the owners of a $100,000 home would pay $634.58 on the city portion of their taxes, up from $611.70 this year. Part of that increase is due to the state raising the residential rollback, which is the portion of a property's value subject to taxation.

Last spring, when Coralville voters failed to approve a local-option sales tax for flood-recovery efforts, city leaders warned of increasing property taxes to pay for the projects. But state and federal funds have helped pay for much of that work, Hayworth said. There are more projects to do, he said, but the city is waiting on word on more grant applications.

The recession and lower-than-usual growth in property valuations led to a mostly status quo budget, Hayworth said. The city plans to add a new paid firefighter to help oversee the city's mostly volunteer force. The city currently has three paid firefighters and up to 60 volunteers, Hayworth said.