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Duluth City Council OKs new street fee

Beginning in August, Duluth residents will begin paying a monthly street maintenance fee on their utility bills.

Residents will pay $5 monthly; businesses will pay a graded monthly fee based on size — $20 for small businesses, $90 for medium-sized businesses and $240 for large businesses.

The fee will raise $2.8 million annually, including $1.2 million for the remainder of 2014.  

The Duluth City Council approved the fee at its meeting Monday.

One resident in attendance called the fee a double, even triple, tax. David Ross, the Duluth Area Chamber of Commerce president, referred to the 3,800 commercial properties his organization represented as a “minority” who will pay a disproportionate amount of the fee. Others protested, too, in a short round of appeals to the council.

But a 6-3 majority vote carried the fee, albeit reluctantly, ahead.

“I do see this fee as investing in our community in a time of really big financial insecurity,” said councilor Emily Larson.

The city has been without a mechanism to pay for its street improvements since 2009, when a revenue-sharing agreement with the Fond du Lac Band of Lake Superior Chippewa fell apart. For past street repairs, the city relied on about $6 million per year it received from the band’s operation of the Fond-du-Luth Casino, but the revenue-sharing agreement was deemed unacceptable by the National Indian Gaming Commission,  and the ensuing legal dispute continues.

“It’s important we get started,” said councilor Barb Russ.

One dissenting councilor, Zack Filipovich, said a fee would replace work that needed to be done during the annual budget process. Another worried that with a fee in place, councilors and city administrators would lack the “political will” to come up with bigger and better solutions.

Bigger solutions included councilor Jennifer Julsrud calling on the federal government to come to the aid of municipalities, saying of infrastructure: “This is a national issue. Iraq, Afghanistan, I’m done with it. I’m angry about it.”

Councilor Howie Hanson voted against the fee, but refused to blame city administrators for kicking the issue to the council to solve.

“The city is doing its best,” he said. “There are no hidden pots of money.”

Hanson called on the Minnesota Legislature to approve a for-profit casino for Duluth to be located at the Duluth Entertainment Convention Center. He said it was time for Duluth to “begin to sell widgets,” and told his fellow councilors he’d be bringing a casino resolution to the board for approval in the near future.

The city’s chief administrative officer, David Montgomery, said he’s heard a lot of “good, thoughtful ideas” from city residents, but nothing that addresses the triage necessary as the city’s streets deteriorate.

“This is a necessary first step,” he said, dampening the council chambers further when he said the fee would provide less than half the money the city needs each year to repair its streets. “We’ve got a lot of work ahead of us.”

A city gas tax is often cited as a potential solution. But it would require state approval and, Julsrud said, it would amount to only hundreds of thousands of dollars, and not be the solution some believe it could be.

The fee will join the city’s streetlight fee on utility bills. The council voted last meeting to end that fee in December 2018. The street maintenance fee will require the council’s approval annually, and will come up for 2015 approval this fall when councilors consider the city’s fee resolution services.

“These types of fees shouldn’t be what we turn to,” said councilor Joel Sipress. “I support this in the short term so we can get to work.”