Legislative Correspondence
Oty Manager's Office
Oty Hall
50 West 13th Street
Dubuque, Iowa 52001-4864
(563) 589-4125 office
(563) 690-6025 /",
(563) 690-6678 TOO
citypers@cityofdubuque.org
www.cityofdubuque.org
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January 21, 2005
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Representative Jeff Elgin
State Capitol Building
Des Moines, IA 50319
Dear Representative Elgin:
This is in response to your letter regarding the proposed increase in IPERS
contribution rate. It is my understanding that the IPERS Beneficiary Advisory
Committee has recommended that the state legislature increase the contribution rate
from the current combined rate of 9.45% to 13.45%. This increase would be
accomplished by increasing the rate by a total of 1 % each year for the next four years.
One of the alternatives being considered for increasing the contribution rate is to
change the percentage contribution for the employer and employee from the current
60%140% split to a 50%/50% split. I believe it is appropriate that any increase in the
contribution rate be shared equally between the employer and employee. The
50%150% split is a fair and reasonable approach to addressing this issue.
Thank you for the opportunity to express my views on this important piece of
legislation. If you have any questions. please feel free to call.
since71~~
Michael C. Van Milligen
City Manager
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Jeff Elgin
STATE REPRESENTATIVE
Thirty-Seventh District
Slatehouse: (515) 28J~3221
e.mail - jeff.elgin@legili.slate.ia.us
APPROPRlA nONS SUBCOMMlTTEE
Administration & Regulations
COMMI'ITEES
State Government, Chair
Environmental Protection
Transportation
HOME ADDRESS
6940 Bowman Lane NE
Cedar ilapids,lowa 52402
Home; 319.3.5C4KK17
Home Fax: 319-377-5636
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State oflowa
Eightieth General A.ssembly
STATEHOUSE
1II.. S1Din....lluUJ. 50319
Dear IPERS Employer:
J am again privileged to be the House of Representatives, State Government Committee
Chainnan and as you are aware, all state pension bills are funneled through the State
Government Committee. I have had the opportunity to floor manage the last two IPERS bills.
Last year we attempted to increase the contribution rates for both the employees and employers.
The Senate did not agree with the increas.e and this section of the bill was eliminated. Because
the unfunded liability amount is a serious issue, I am willing to move another IPERS bill during
this legislative session even though it is not considered an "JPERS Year".
As last year's bill was being fonnulated in subcommittee, I presented several alternatives for
increasing the contribution rates. Basically, all these alternatives revolved around the concept of
changing the percentage of contribution from the current employee pays 40% and the employer
pays 60% of the rate to a 50%/50% split. These proposals were met with opposition by several
employee groups and the bill that was originally passed by the House retained the 40%/60% split
for the proposed rate increases.
The IPERS Benefits Advisory Committee, BAC, has again recornmended that we increase the
contribution rate from tlle current 9.45% to 13.45% using the current 40%/60% split. This
increase would be accomplished by increasing the rate by a total of I % for the next four years. I
realize that you, as an employer, have representation on the BAC, but I am interested in hearing
directly from the fifty largest employers as to their opinion on this matter. If the majority of you
want me to continue to explore a contribution rate that is different than the 40%/60"10 split, J will
be glad to do so. On the other hand, if the majority wants me to move forward with the BAC
recommendation, I will do that.
Weare currently having the IPERS bill drafted and I would like to know your position on this
matter as soon as possible. Could you please either e-mail or mail your preference to Ms. Kelly
Ryan, my State Government research analyst? Her e-mail addressiskellv.rvan@Jegis.state.ia.us.
Her mailing address is, Republican Caucus Staff, House of Representative, State House, Des
Moines, lA 50319.
Thank you for your consideration of this important issue.
Sincerely,
9#cr
Jeffrey C. Elgin
February 1, 2005
VIA E-mail and
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1 Class Mail
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«CompleteLOCALName_Address»
Re: Franchise Fees
Dear«Title» «Last»:
Recently there has been discussion among State legislatures regarding the elimination
of franchise fees. The ability for a municipality to charge a franchise fee on utilities has
been allowed under Iowa law for more than 40 years. Currently the City of Dubuque
charges a franchise fee on cable (5%), gas (2%) and electric (2%) utilities. Combined,
these fees total approximately $1,792,000 annually (gas $440,000, electric $792,000
and cable $560,000) based upon projections for the Fiscal Year 2006 budget. While the
cable franchise fee has been in place for over 20 years, the gas and electric franchise
fees were implemented with the Fiscal Year 2004 budget.
In 2003, the State legislature approved significant revenue cuts to communities after the
City’s budget had been certified according to State law. As a result the City of Dubuque
was forced to propose budget cuts, including layoffs of Police and Fire personnel, and
look at other ways to collect revenue. These staff cuts would come after the City had
eliminated 68 full-time positions since the early 1980’s. This necessitated a 5-hour
public hearing by the City of Dubuque, attended by over 400 very unhappy people. The
gas and electric franchise fees, which were established at 2%, provided additional
revenue for the City of Dubuque and eliminated the need to layoff Police and Fire
personnel, while there were still other position cuts.
The City of Dubuque has a strong history of being fiscally responsible. As you look at
the past 11 years, the City of Dubuque has had no new property tax increase for the
average homeowner, and in five of these years has had a property tax decrease. The
only exception was the State-initiated increase caused by under-funding the Homestead
Tax Credit. In addition, user fees (refuse, water, stormwater and sewer) are some of
the lowest fees for the nine largest communities in Iowa. When Dubuque implemented
the gas and electric fees on October 1, 2003, it was after careful consideration of the
February 1, 2005
Page 2
impact these fees would have on other taxing bodies and residents with limited means.
Dubuque’s 2% franchise fee is not an additional fee on top of local option sales tax.
This fee replaces the City’s 1% local option sales tax and the Dubuque Community
School District’s 1% local option sales tax (the school district did not include a 1% local
option sales tax on gas or electric in their revenue calculations) for those required to pay
these taxes. In addition, the City of Dubuque ordinance allows sales tax exempt entities
to receive a rebate of the full 2% of the franchise fee collected.
As mentioned above, the ability to implement a franchise fee has been allowed under
State law for over 40 years. Should the legislature approve language to eliminate the
collection of franchise fees, cities are left with very few options to replace this lost
revenue. Currently the City of Dubuque is considering a tax rate of $9.6991/$1,000 for
Fiscal Year 2006. Should the ability to collect franchise fee revenue be taken from
cities, the result would mean an increase in the recommended tax rate by over 11% to
$10.7841/$1,000. If this fee change were to occur after the City budget is certified, I am
sure the City could look forward to another 5-hour public hearing, and would be facing
severe budget cuts. I encourage you to oppose any efforts to eliminate the ability of
cities to collect franchise fee revenue.
Thank you for your support in this matter.
Sincerely,
Michael C. Van Milligen
City Manager
MCVM:cs
cc: Mayor and City Council
Tom Bredeweg, Iowa League of Cities
Susan Judkins, Iowa League of Cities
Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Dawn Lang, Budget Director
The Honorable Mike Connolly The Honorable Tom Hancock
Iowa State Senator Iowa State Senator
2600 Renaissance Dr #3 310 E Main Street
Dubuque, IA, 52001 Epworth, IA, 52045
The Honorable Roger Stewart The Honorable Pam Jochum
Iowa State Senator Iowa State Representative
3936 317 Avenue 2368 Jackson
Preston, IA 52069 Dubuque, IA 52001
The Honorable Pat Murphy The Honorable Thomas Schueller
Iowa State Representative Iowa State Representative
155 N. Grandview Avenue 503 W. Platt Street
Dubuque, IA 52001 Maquoketa, IA 52060
The Honorable Steven Lukan The Honorable Ray Zirkelbach
Iowa State Representative Iowa State Representative
7365 Columbus Street 637 W. First Street
New Vienna IA 52065 Monticello, IA 52310