0

Franchise Fees Affect All Utilities

In the last couple of months, we’ve watched as our city councilors approved charging franchise or licensing fees to data carriers. Some of our councilors have struggled with charging internet providers, fearing it would increase costs for residents. In truth, a couple of providers have said outright they would pass those costs straight to customers.

Let us tell you a bit about franchise fees.

Cities have agreements or contracts for franchise fees with services that use the public’s rights of way — telephone, cable TV, water, sewer, storm, natural gas, electric, to name a few.

The idea is if a company or entity is going to make its business by using the public’s right of way, that company or entity should pay for it, kind of like rent.

For years, companies that provide internet services — using the public’s rights of way to do so — have enjoyed not paying cities for using those rights of way.

Councilors who have had objections to establishing franchise fees or something similar have had different reasons for said objections. In Independence, a councilor didn’t want to create a burden for Minet or its customers. In Dallas, councilors did not want to be seen as increasing “hidden taxes.”

We don’t see a problem charing internet companies for using the public’s rights of way. It is not up to the councilors to determine how those fees are paid — companies could absorb the costs if they so chose.

Because some have said publicly they will pass the costs to the consumers is not a good reason to object to establishing the fees. This is rent for the public’s right of way, and should be paid.

It is ironic that some of the local internet providers have chosen to pass franchise fees straight to consumers — essentially directly charging the public for the company’s “rent” of the rights of way.

But this is not the fault of the councils. In fact, if city councilors did not establish these fees, it could be seen as playing favorites to one utility over another, particularly interesting since cities charge residents franchise fees for city utilities.

If councilors want to see a change in the cost of living in their towns, they should look at the franchise fees of systems in their control.

City-run utilities — water, sewer, storm and, in Monmouth’s case, electric — all pay a percentage for franchise fees as a matter of common practice. This money — money collected from franchise fees — is put directly into the general fund, removing it from the water fund, sewer fund, and electric fund.

Because money is moved from these funds to pay “rent” for the public’s right of way, we think that money should be tagged for maintenance of the public right of way.

That is, if the public is paying rent for using its own right of way through water, sewer and electric, we think that money should go toward making a dent in our cities’ aging infrastructure. For the 2017-18 budget, the city of Independence is leading the way on these efforts, earmarking 25 percent of franchise fees to pay for transportation infrastructure.

Each city has issues with maintaining its roads and sidewalks. Money from franchise fees is a drop in the bucket when looking at the multi-million dollar price tags on road maintenance, but at least it would be something.

Commenting has been disabled for this item.

CLOSE X

Information from the Itemizer-Observer and our advertisers (Want to add your business to this to this feed?)