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5/23/2007
There's no other word. Appleton is money-grabbing
Tonight, the City of Appleton Finance Committee will vote on a tax increase. In the light of day. Easy as pie - for about 60% of the city – that is, all Time Warner Cable (TW) television/video customers.
It has to do with this nasty Time Warner franchise fee and the Cable Franchise Bill (or SB107 or AB207 or the “AT&T Full Employment Bill”).
What the city wants to do is increase the franchise fee/tax from 4.5% to 5%. Under current rules, the tax is applied to a very liberal definition of “gross receipts” – every single dime (well, almost) TW receives. The 4.5% tax is even applied to itself – in other words, cable subscribers are paying a tax on a tax (current rules).
Under SB107, the franchise fee could no longer include the tax on a tax. So the 4.5% applied using “New Rules” will result, all things being equal, in a lower total tax paid to the city.
Appleton’s point person on franchise fee negotiations and our expert on the vagaries of SB107, Assistant City Attorney Ellen Totzke, is asking the Council to increase the city’s franchise fee from 4.5% to 5% – because 5% of a lower “gross receipts” number (New Rules) is about the same as 4.5% of the higher “gross receipts” number (current rules).
Attorney Totzke’s memo (pp. 2-5) to the Council states:
“The reason for this request is an attempt to minimize the budget impact of Wisconsin’s Proposed Cable Franchise Bill on the City of Appleton. As most of you are aware, the City receives close to half a million dollars in revenue from Time Warner for its cable television services….
"The purpose...is two-fold: 1)to provide the ability to receive a 5% fee from AT&T on their video/television service and 2) to minimize the loss of revenue... engendered by the Cable Franchise Bill."
So… let’s talk “loss of revenue.” In 1997, the city collected $256,785 from TW (well, from TW subscribers) in franchise fees. In 2006, that number almost doubled to $501,042. No loss of revenue there! That’s an annual increase of almost 8%! Wow – over three times the rate of inflation for that same time period! Loss of revenue?
Franchise Fees are nothing but a hidden tax. Whenever there’s an opportunity to control (or reduce) them (and certainly not to raise them), we should take that path. Supporters of the rate increase will argue that less franchise fee revenue means the need for more property tax revenue. Supporters of the increase will also argue the new state law will allow a maximum of 5% - why not claim it all while it’s there for the taking?
Here’s the deal. Less franchise fee revenue means making choices and limiting increases in spending. But claiming that revenues will decrease is a bit of a red herring. Given the growth in revenues the last decade, “New Rules” notwithstanding, I’d say chances of "less revenues" for 2007 and beyond are pretty low.
For heaven’s sake, levying a county sales tax of ½% is fought vigorously, year after year when it inevitably raises its ugly head. Old Rules, New Rules, current rules, Golden Rules – perhaps this ½% increase should be considered as carefully.
COMMENTS
I think I am glad I no longer use Time Warner. I have a satellite system. Jo, thanks again for being a good information source.
Interesting. Good to remember too, that it's not TW that is the villain here. It's the city - and you and I who benefit from city-paid services, taking advantage of the revenues from the hidden franchise fee/tax JE
Dale (Wed May 23 08:34:37 2007)
I can't think of one, uno, ichi,numero uno taxing body of government that is slowing spending while not increasing fees, taxes, call it what you want.
We are finally finding out what oppression by the ruling class feels like; the sense of futility I see in my fellow citizen whose apathy is worn like a ski mask.
"Live free or die" the call of patriots.
Richard (Wed May 23 09:44:23 2007)
You go girl!
Dave S. (Wed May 23 15:41:32 2007)
Franchise fees are not a hidden tax. It is clear as day on your cable bill. Maybe you should explain to your readers what the franchise fee is for, public right of way, etc. While we are on this topic doesn't it bother you that AT$T is busy digging up the whole city and placing large cabinets all over the public right of way?
Well, I hear you Tim. But I say the tax is hidden because it's not at all obvious looking at your bill that the dollars are going straight to city coffers. $500,000 for right or way rental? Pretty steep, I'd say. And why then doesn't the city collect franchise fees/taxes from the gas, electric, phone and internet utilities? And those "52B cabinets" - I'm with you there. I talked about those a few weeks ago. JE
Tim (Wed May 23 20:21:24 2007)
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