As property tax reform and slow valuation growth put a crunch on the city of Burlington’s budget, voters will decide whether to diversify revenue sources with utility franchise fees.
The Iowa legislature passed House File 718 in 2023, limiting how much revenue local governments can generate from property taxes. Burlington City Manager Chad Bird said that took away several revenue levies for the city.
“Probably the one that was most impactful is that Burlington had a voted library levy that generated about $200,000 a year directly dedicated to the library,” Bird said. “House File 718 through property tax reform removed that as a tool for us.”
In addition, the property valuation is not keeping pace with cost of living or the consumer price index. Several times in the past few years, property valuations have actually decreased.
With less money flowing into the general fund, Bird has already proposed $1.1 million in budget cuts and deferments to the city council.
“But I also floated this idea of alternative revenue as a long-term forecast of where I see things going in the next three to six or seven years,” Bird said.
Bird is proposing 3% franchise fees on gas and electric bills. That would remove the one-cent local option tax on those bills, but add around $4 to the monthly bill for the average home.
The special election is Tuesday, March 4, with polls open from 7 a.m. to 8 p.m.
If the fee passes, it will generate $1.5 million a year, although the city would lose some revenue from the elimination of the local option sales tax on utility bills.
“If it does not pass, then we will see cuts in service. Like I said, I presented $1.1 million in cuts this year. Most of those will probably remain as cuts and not be in the budget moving forward,” Bird said.
The franchise fee would also generate revenue from non-profits and governmental agencies that don’t pay property taxes.
Bird said some non-profit organizations depend on city services, despite not paying property taxes.
“I don’t mean that in a harsh way. It’s just a reality. We have some organizations in town, for example, that rely on police and fire on a somewhat regular basis,” Bird said. “So the utility franchise fee really would be a way for them to contribute to the services that they are already receiving.”
Bird said the budget is a balancing act every year, in terms of prioritizing what the city funds, what it defers, and what simply gets cut. This year, he said, it’s likely the city won’t be able to open the pool this summer.
Another area of concern without diversifying revenue sources is public safety. Bird said the police department is currently eight officers down from being fully staffed.
“Recruitment and retention is a key element of that, and I simply need to find a way to have our wages be more competitive to help not only with retention,” Bird said.
But it's just not wages that attract people to live and work in Burlington.
“They'll look at wages, but they also look at, well, if I move here and take this job, what amenities are available for my family in the community? And so maintaining quality of life initiatives is equally as important,” Bird said.
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