Monday, January 7, 2013
Oro Valley Considering Franchise Fee
There is a second discussion item for this Wednesday's special Council Meeting. It regards the idea of creating a Franchise Agreement between the town and a public utility. Read about it here. A franchise agreement gives the utility the right to use town "right-of-ways." In return, the utility pays the town an annual franchise fee.
You will have the opportunity to vote on this next May if the Town Council votes, at some point, to recommend it to you. It becomes law only when the voters approve.
Sound's like a great idea, right? The Town of Oro Valley gets a sustainable source of revenue and an agreement on how the right of way can be used. The Utility then pays for the right to use that right-of-way.
Here's the problem: "when a franchise fee is levied on a utility the fee is passed on directly to the customer and itemized on their bill as a municipal fee."
That's right. A franchise fee imposed on a utility becomes a back door tax for you to pay on your utility bill. This is in addition to the Oro Valley utility tax that you already pay.
The typical franchise levy on a consumer utility bill is 5%. The current Oro Valley utility tax is 4%. The total is 9% simply because you turn on your lights or have a landline.
What do you think? Is this a good or a bad idea?