Chronicle Editorial

By: 
Chronicle Staff

Franchise fee revenue needs right formula
 
     From backfilling depleted budgets to street repairs, it appears the Hampton City Council will have its hands full this winter deciding how to spend future franchise fee revenue.
     For those that are still unaware, the franchise fee will essentially work as a tax on energy consumption in Hampton and generate around $225,000 each year. It allows MidAmerican Energy to assess a 5 percent surcharge to customers’ monthly bills, which will then get funneled back to the city for things like infrastructure repairs and other needs. The council debated the plan for more than a year before giving it the OK in September.
     Back then, much of the narrative focused on using the revenue to repair Hampton’s crumbling streets. It seemed like an easy way to generate much needed money, but recent discussion has somewhat shifted the plot. Depleted revenue created by state-mandated property tax rollbacks might force the council to use franchise fee funds in other areas of the budget.
     The development isn’t entirely shocking. The council discussed the franchise fee way back in 2014 as a way to replace lost property tax revenue. However, discussion soon shifted to infrastructure repairs, and it seems council members might get stuck between a rock and a hard place deciding how to spend the money. Should the city pay for long-overdue road repairs, or keep Hampton’s budget operating at near-normal levels?
     It’s clear both issues deserve due diligence. While future property tax rollbacks are a cause for concern, it’s hard to ignore Hampton’s deteriorating roads. The council must develop a long-term strategy that divides the revenue for future use on both issues. By saving at least 60 percent of franchise fee revenue and allocating it towards future street repairs, Hampton can start chipping away at its ailing infrastructure while simultaneously backfilling a portion of the lost tax revenue.
     The franchise fee isn’t going to be the end-all solution to infrastructure needs or budget shortfalls. It would only amount to $2.25 million if the council were to save all of it for 10 years. That’s not a lot when you think about the astronomical costs of street upkeep, but it would be a start. Multiple roads in Hampton are on their last legs and need work immediately. By allocating money and saving for the future, the council can show it’s serious about fixing city streets.
     It’d be nice to use all of the franchise fee revenue on infrastructure improvements, but that’s a pipe dream. Tax revenue for small town municipalities is already hard to come by, and commercial and residential property tax rollbacks will only limit those funds over the next 10 years. The council needs to address both issues by developing a clear plan for franchise fee revenue during next year’s budget planning sessions. Hampton residents deserve decent streets, and the council would be selling citizens short if it doesn’t allocate at least some of the money for future road improvements.
     However, it shouldn’t stop there. City leaders should also exhaust all efforts to fund future infrastructure repairs on top of the franchise fee. Anything its revenue helps repair will only be the tip of the iceberg.

Hampton Chronicle

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Hampton, IA 50441
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