Franchise Fees: a bad idea (even if everybody does it)
Bloomington residents, nonprofits and churches started seeing a city Franchise Fee on their Excel and CenterPoint Energy bills in March. With these new “taxes in disguise”, they joined the 85% of the residents of Hennepin County who are already subject to franchise fees. This includes neighbors from the cities of Edina, Eden Prairie, Minnetonka and Richfield.
Peter J. Nelson, Vice President and Senior Policy Fellow at Center of the American Experiment, testified March 3, 2016, to a division of the MN House. He provided an understandable in-depth look at the legal pitfalls of using franchise fees in place of taxes.
He concluded his remarks with this statement: “Ultimately, taxes fund public purposes, whereas a fee is generally a voluntarily incurred charge to people who benefit from a service. This distinction is very important to maintain if constitutional limits on taxation are to mean anything, and if citizens are to remain able to understand city budgets and hold elected officials accountable.”
We are currently seeking comment from a Bloomington City Councilman on an article we’ve written examining the financial justifications Bloomington used in approving franchise fees. We will post that article in the near future.