DES MOINES, Iowa — Nearly a decade ago, Lisa Connett, newly divorced and struggling on a tight budget, decided to fight City Hall over its "franchise fee" on residents' utility bills. Now, as a result of her class-action suit, consumers here stand to collect some $40 million in refunds on fees that courts deemed an illegal tax.
But not everyone eligible for a refund is happy. Some have even written to City Hall officials telling them to keep the money.
"We are worried about cuts in services," said Lance Henning, the executive director of the Greater Des Moines Habitat for Humanity, who said his organization would prefer to forgo the more than $6,000 in repayment it has coming. "We want a strong city."
City Council member Christine Hensley said many Des Moines residents tell her they oppose the refunds because, as they see it, "they're probably just going to have to turn around and pay higher taxes" to cover the cost.
Connett, 42, is puzzled by some of the sentiment. "They act like I've done something wrong."
To the contrary, according to judges, it was the city that erred by creating a tax without proper authority. To address the legal issues with the franchise fee, the Iowa Legislature in 2009 granted the appropriate taxing powers.
But the fees collected by the city between 2005 and 2009 were unauthorized, the courts ruled, and must be returned to the customers of the utility, MidAmerican Energy.
The city is considering a range of measures to make up for the money it will need to repay, City Manger Rick Clark said. "For a city of our size," he said, "$40 million is a huge number to replace."