WIUM Tristates Public Radio

FM Chamber Opposes Franchise Fees

Feb 28, 2014

One aspect of Fort Madison’s proposed budget is facing some strong opposition.

The Fort Madison Chamber of Commerce says it opposes the city's proposed franchise fees on gas and electric bills
Credit Jason Parrott / Tri States Public Radio

The city wants to replace the existing 1% local option sales tax (LOST) on gas and electric bills with a 1% franchise fee.

City Manager Byron Smith estimates the switch will generate an extra $150,000 for the city during the upcoming fiscal year.  That's because LOST revenue is pooled and divided between participating governments while franchise fee revenue goes directly to the city.

The Fort Madison Chamber of Commerce has come out against the proposal.

Tim Gobble with Fort Madison Partners says businesses and industries are worried about the unknown.

"The unknown idea of what could happen with future councils as well as the impact on the county," says Gobble.

It’s estimated that Lee County will lose about $80,000 next year in local option sales tax revenue if Fort Madison adopts the franchise fees.  The county would likely have to cut services to make up the difference.

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The Chamber of Commerce made its stance known in a letter to the city this week.  In it, the organization stated its willingness to work with the city on a solution.

The additional $150,000 is included in next year’s budget, which could be finalized by the Fort Madison City Council on Tuesday. March 4.

Smith says the city has several options if the city council decides to eliminate the franchise fees.  One alderman was recently quoted as saying he would vote against the franchise fees if even one industry opposed it.