Ramsey needs new way to pay for road repairs after council votes to eliminate franchise fees

Just a year after imposing a fee on property owners' utility bills to fund road repairs, the Ramsey City Council voted Tuesday to rescind them and now must find a way to replace the money they brought in.

A slim majority of council members approved an ordinance repealing the city's franchise fees effective at the end of the year. Without the fees that bring in about $2 million a year, the far northwest metro city will have to find another way to pay for maintaining its 180 miles of roads.

"This is not a good process to repeal something before we have a working plan in place to replace it," Mayor Mark Kuzma said before voting against the measure. "This is not the time to be doing this."

Ramsey, with a population of about 27,500, is just starting to look at its 2022 budget and could choose to levy a tax in lieu of the franchise fees.

Resident Thomas Gamec said he was in favor of keeping the fees, which are costs utilities such as gas and electric companies pay a city for permission to use the right of way to deliver services. Those costs are added on to consumers' gas and electric bills, and the money goes to cities for specific purposes. In Ramsey, the fees were dedicated for roads.

"I have never seen the city of Ramsey with as bad of roads as there are now," Gamec said while addressing the council. "Tell us what you are going to do before you eliminate something. How can we say you are going to come up with something better? We don't know. I favor franchise fees because I know that money is going toward roads."

Others stepped to the podium imploring the council to take more time before making such an important decision. One person spoke in favor of ditching the fees.

Ramsey previously applied special assessments to pay for road projects. Last year, it instituted franchise fees as a way to have a long-term, reliable funding source for them.

Council Member Chelsee Howell voted to repeal the fees, saying they amounted to a hidden tax on utility bills.

"They don't see that," she said. "They are not looking for taxes there."

Council Member Dan Specht said Tuesday's move will make what the city is taxing for more transparent, and that as many as 70 to 80% of homeowners would pay less by eliminating franchise fees. Homeowners paid $14 a month in franchise fees, or $168 annually. Churches were charged about $20 a month while larger commercial properties were billed based on the size of their meters.

"A franchise fee is better than an assessment, but we don't want to settle for what is better," Specht said. "We want to settle for what is best, and that is putting it on the tax levy."

Specht added that would allow homeowners to be eligible to file for property tax refunds.

But the mayor was unconvinced.

Franchise fees have been in for a year and "it seems to be working," he said. Without knowing what the tax levy would be, "I think this is the wrong way to be handling this."

Tim Harlow • 612-673-7768