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Utility Franchise Fees: Taxes in Disguise

Franchise Fees are a convenient way that cities can collect revenue from you without having to call it a tax. But, make no mistake, it is still a tax - a tax in disguise.   

See the exact slide below that Lakeside City Alliance was pitching to those who attended one of their meetings:  

Cities proposed in DeKalb - at what cost?

Everyone wants a piece of Tucker these days, or so it seems.  There are three different city groups who have drawn various configurations of city maps.  Each map includes some portion of what is now called Tucker, as you and I have always known it to exist.  None of the maps are fully inclusive of our area, so if any of them are approved, Tucker will be forever changed as a result.

While each proposal for a new city in our area offers a slightly different version of the same story, they are all essentially offering to take a few services away from the county and place them under the control of a new layer of government.  And to pay for that new layer of government and everything it comes with, the city advocates are saying that it won't come with a higher property tax.

For example, in an article in the Champion, I read this from a Smoke Rise resident and politician Frank Aumen:

“These numbers are based on the current tax level which means no property tax increase is necessary,” Auman said.  

And from the Lakeside City leadership, a report in Crossroads News stated:

"Well, ideally there would be no additional taxes," Woodworth said, prompting laughter. 

What they are NOT saying is that it will be completely free because that would be a lie.  It absolutely will cost us.  They are only claiming that the money will not come from our property taxes (at least not at first), but they will find other ways to get the money.  That is what government does to survive:  it looks for ways to get money from us so they can expand and grow.

It should not matter if you are Republican or Democrat, paying more money for something we already have just doesn't make any sense.  And we should not be forced into becoming a city simply to "protect" our investment in Tucker from a "takeover" by a neighboring area simply because they know how to work the system and use the loopholes in their own favor.

One BIG way cities can get more of your money is through the collection of what's called "Utility Franchise Fees."  I looked into this particular item and here is what I have learned:

The Utility Franchise Fees

Franchise Fees are a convenient way that cities can collect revenue from you without having to call it a tax.  But, make no mistake, it is still a tax - a tax in disguise.

A City under the law has the right to charge fees to the utility companies for the use of its streets and right of ways, and for the right to do business in their city. (In the case of Tucker 2014's plan, the franchise fee on your electric bill, for example, was estimated in their feasibility study to be 4%.)

The city comes to an agreement with the utility on what they should pay.  And then, the city approves the utility's plan to just pass that cost along to you.  Essentially, the utility is just the middle man.  The fee will appear on your bill, even though nothing will have changed (for better or worse) as a result of your becoming a city.  The only change is that you are now paying more for the same services.  And they can tack on these fees to every public utility you pay:  Electric, Gas, Water, Cable.

In Tucker's feasibility report, the amount they would collect in franchise fees (business and residential) is FOUR TIMES the amount they are seeking to collect from our property taxes alone, even though that is usually the only tax they talk about.  For our small business owners, especially businesses that rely on their land line phones to conduct business, the costs could be astounding.

And, encouraging people to use their mobile devices instead of land lines opens up a whole new set of problems.  I understand why the phone company wants us to make the switch (far fewer outage repairs when you are talking about a service delivery that uses "air" instead of expensive wires and cables).  But, do we want to back ourselves into this corner or relying on a less secure way to conduct business and potentially create the "need" for more cell towers after a long fought battle to keep them out of our neighborhoods and away from our school grounds?

Even Herman Lorenz of Briarcliff has admitted that Franchise Fees are essentially taxes.  Here is a quote from a blog he wrote:

"Like so many taxes (and these are essentially taxes), the burden falls not on individuals, but on businesses (and so indirectly to us).  So you might have almost no franchise tax in your bill, but businesses pay a lot."

So, when you hear that your taxes will remain the same, or even go down, don't forget you are still going to have franchise fees and they are just like taxes.  Franchise Fees are Taxes in Disguise!

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