Industry leader wants more notice on franchise fee hikes

FORT MADISON – A dialogue over who’s really paying natural gas franchise fees in Fort Madison has resulted in a possible reduction in the amount of tax the city collects.
At Tuesday’s regular Fort Madison City Council meeting, the council entertained second readings on ordinances enacting a 1.5% increase in two fees passed through by Interstate Power and Light, commonly known as Alliant Energy, and MidAmerican Energy.
After reviewing the proposed ordinances, City Manager Laura Liegois said currently non-transport customers, those buying natural gas directly from the supplier and bypassing MidAmerican’s services haven’t been paying the tax. She said that was nine non-residential customers, but said she doesn’t have access to what industries those are.
However, the new language includes those industries in the tax collection, and Liegois said that would increase the amount collected on natural gas by $40,000 at the current 1.5% rate.
Upon hearing that, Councilman Matt Emmett asked that the ordinance be amended to leave the natural gas rate at 1.5% under the new language. That amendment was approved by the council.
During the discussion local leaders from two industrial facilities Conagra and Axalta expressed concern with the escalating costs and lack of communication around the increases.
Lori Galle, plant controller at Conagra said she was speaking on behalf of industries and they weren’t aware of the potential for increases. She indicated several emails had been exchanged between industry leaders in the past few days.
“We were not aware that you guys were looking at increasing franchise taxes. It’s kind of upsetting because industries go through a budget cycle that has to be approved and then you’re held accountable for it,” she said.
“You guys are making these decisions and you’re not even letting industry know. And now you want us to find other ways to cut to pay for these things”
She said tariffs and inflation have tightened up everyone’s budgets and they don’t have a lot of wiggle room left. She said corporate leaders are looking at local performance and these hits could jeopardize future planning locally.
“It would be nice to know that we were going to do this and give a heads up. If you’ve guys talked about this for how many months and put this in your potential budget for the year, you put that out there so that we know we need to budget for it and we know what those costs are,” she said.
In May of 2025, due to traction in the Iowa Legislature around property tax reform, the City Council held discussions during a council meeting around franchise fee increases from 1.5% to 3% for both electricity and gas.
Councilman Rusty Andrews said Conagra was involved in the discussions when the city increased the franchise fee from 0% to 1.5% several years ago. He asked what else the city should do to let them know other than public notices, agendas, and public meetings.

“I just think you need to notify the industry and say we have the power to raise this and we’re looking at doing this. We can’t approve this tomorrow but in six months to 12 months we will and if you guys need that for your budget cycle you can plan for it,” Galle said.
“We’re supposed to be partners.”
Andrews said the state then needs to change its law to require a time for a notice for fee changes.
“State’s not going to do that, so if we’re worried about this can we vote on this today and enact it in 12 months,” he said. “I need to spend more time with industries. This is blowing my mind. I’m worried about low-income people paying these taxes, and small business, and we’ve got industries excited.”
Liegois said the public is provided notice for hearings on the city’s website and through local media. She said they follow Iowa code on public meeting information and Iowa Code on franchisee fee movement.
Councilman Dustin Yager said Keokuk is currently at 3 percent and may be going to 5 percent.
“West Burlington is at 3%, Cedar Rapids is at 4%, Des Moines is higher. We’ve been at 1.5% for a long time. We’ve been lower than pretty much everyone around us for a long time guys. Nobody wants to see taxes go up and I get businesses have bottom lines, but so does the city,” Yager said.
“Every year we go through and try to find how we balance the budget and not raise any taxes and we’ve managed that for more than three years. There’s no other place to cut.”
Leisha Beutler, Plant Manager of Axalta said the answer is economic development.
“The answer is creating jobs in the community, people come to the community, and you have more people paying taxes, you attract new businesses,” she said.
Councilwoman Angela Roller said the city has done what they can to cut and balance the budget.
“At some point there is an expectation for services the city provides. Are we going to be in a position where we don’t provide some of those services or we cut back on those services?” she said.
“I can appreciate the heartburn that everyone has, but the city has that heartburn as well.”
The ordinances to change the franchise fee language still needs another reading before being approved, which will take place on July 7.