Ramsey moves to eliminate road repair fees

The Ramsey City Council after a contentious discussion on Tuesday took the first step toward eliminating fees that property owners pay to maintain the city's roads, just a year after they were instituted.

A narrow majority of council members approved an ordinance repealing the city's franchise fees, though a second vote — expected July 27 — is required before it would take effect at the end of the year.

Mayor Mark Kuzma called the vote "ill-conceived" because the city is just starting to budget for 2022, and council members have not offered an alternative to replace the $2 million franchise fees bring in annually.

"You need to stop playing politics and represent people of Ramsey," he said during the meeting.

Franchise fees are costs that utilities such as gas and electric companies pay the city for permission to use the right of way to deliver services.

The fees are generally passed to consumers and the money goes to the city for a specific purpose. More than 300 cities in Minnesota had franchise fees in 2019, according to the League of Minnesota Cities.

Ramsey previously applied special assessments and an annual property tax levy to pay for road projects, but last year enacted franchise fees on electric and gas utilities — including Connexus Energy, Anoka Municipal Utility and CenterPoint Energy — as a way to have a long-term, reliable funding source for street repairs and maintenance.

Without a franchise fee, the city could levy a tax to pay for maintaining its 180 miles of roads or cut money from other departments.

Council Member Ryan Heineman, who joined the council in January after winning a special election, said franchise fees disproportionately falls on owners of lower-value properties.

"I am advocating for a proportional tax based on value," he said. "I am passionate about it. I ran on getting rid of it."

Council Member Debra Musgrove, who put forth the motion to repeal the franchise fee, said the city will bring in enough money using a levy to pay for road maintenance because new home construction will expand the tax base. She also said a tax is more transparent than franchise fees.

"Residents know what they are being taxed for," she said.

He also questioned whether a levy based on property values is equitable, and suggested allowing residents to vote on the issue.

"Just because I finish my basement doesn't mean I drive more," he said. "As my property tax goes up, so does my bill."

Council Member Chris Riley said he was concerned about repealing franchise fees with no replacement plan, and fears a tax levy might hit businesses hard.

"Whichever plan we adopt, my goal is that our roads are fully funded," he said. "Somebody has to pay."