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Billings City Council considers franchise fee settlement

Posted at 11:33 PM, May 22, 2023
and last updated 2023-05-23 08:26:07-04

BILLINGS - The Billings City Council is weighing options as it decides whether to accept a $3.6 million settlement and end a nearly 5-year-long dispute over illegal fees charged by the city for water, wastewater and solid waste service.

In order to pay that amount back to residents, the city could look to the taxpayers.

Citizens filed a lawsuit in 2018 that determined the city was charging an illegal sales tax since the money collected did not go to pay for water and wastewater processing and solid waste disposal, but instead went into the general fund.

"Five years ago we tried to settle this for $20,000 and the city said no," said Tom Zurbuchen, one of seven plaintiffs listed in the lawsuit. "End result is exactly the same five-plus years later, but the dollars are drastically higher. What a shame."

The Billings City Council considered the final settlement of the class action lawsuit.

About 35,000 people that paid for those services from 2015 to 2018 are eligible to receive settlement money.

According to the city, that settlement amount is not in the current budget or in the proposed budget for 2024.

Instead, the city council is looking into short-term borrowing or a one-time tax increase in property taxes.

The settlement cannot be paid by raising rates because of the settlement.

The money collected from franchise fees went into the general fund starting in 1992 and stopped in 2018.

"For the past 30 years almost there was close to $50 million extracted by the city through these illegal sales taxes," said Matthew Monforton, class counsel for the plaintiffs. "So we're not able to get all of those illegal sales taxes refunded."

Monforton says the city would not accept a settlement of $20,000 for attorney fees and agreeing to eliminate charging franchise fees.

In a news release, the city stated the agreement did not include a release of all claims, which would leave the city vulnerable to future lawsuits.

Q2 asked for an interview before the meeting, but no one from the city was available.

More information on the settlement is available on a special website.