City manager warns state bills could curb franchise fees; describes confusing tax-notice language

City Manager Travis briefed the Decorah City Council Monday on several pending state bills that could affect municipal budgets and described a required county notice for the city’s proposed fiscal 2026 property-tax levy that, he said, misrepresents how property taxes work.

Travis told the council that Senate Study Bill 1181 would “prohibit the collection of franchise fees” and, if enacted, take effect July 1, 2025. He said the change would not prevent franchise agreements for right-of-way use but would bar cities and counties from collecting franchise fees under those agreements.

Travis also reviewed House File 600, a property-tax measure that would cap levy growth to no more than 2% of the previous five-year average unless an override is approved by 60% of voters. He described how such an approach could squeeze communities experiencing valuation decline, particularly noting concerns for jurisdictions with falling assessed valuations.

Travis criticized the county-generated public notice for the city’s proposed levy hearing, saying the notice implies large percentage increases for typical residential and commercial assessments. “This notice is a terrible misrepresentation of how property taxes work and is not at all accurate information that’s gonna help educate the taxpayer,” he said. The notice is a form required by state law and will be mailed by the county auditor; Travis told council staff can draft a plain-language cover letter to accompany it.

Travis said the notice’s percentage figures assume classwide assessed valuation changes (for example, a 1.77% increase in residential class assessed valuation) and do not represent the change for any specific property owner. He told council the staff will work with the county auditor to include an explanatory cover letter with the mailed notice.

Why it matters If the state bars franchise fees, municipalities will lose a funding tool used for local infrastructure purposes, and the city would need to identify alternate funding sources. The levy-notice criticism matters because the mailed form is the primary legal disclosure residents will receive before the public hearing on the proposed fiscal 2026 levy.

Ending — next steps Travis said staff will draft a lay-persons’ cover letter to accompany the county notice and will provide more detail about levy-rate versus tax-dollar impacts at the public hearing set for April 7 at 5 p.m.