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Council asks staff to study swapping 1% sales-tax for 1% franchise fee to increase city revenue
Summary
A council member asked the city administrator to review replacing local sales-tax revenue with a 1% franchise fee on utilities (a swap sometimes used by other Iowa cities) that could boost city revenue while keeping customer costs neutral; staff said it requires a purpose statement and legal review.
During other business, a council member asked City Administrator Scott to review policies that would substitute a 1% franchise fee for the city in place of a portion of the local sales tax. The speaker described the swap as revenue-neutral for customers — shifting from a 7% sales tax to a 6% sales tax plus a 1% franchise fee — while allowing the city to retain a larger share of that revenue.
Scott said other Iowa cities had used similar approaches and that switching to a franchise fee could mean more direct revenue for the city. He cautioned that the city would need to draft a purpose statement, perform legal review and identify how the fee would be used. Council members agreed staff should review options and report back.
No formal motion to adopt policy was made; the council asked Scott to prepare options and analysis for future discussion.
