“Franchise Fee” vs “Regressive Water Tax”

Rango the Dog

Rango the Dog

Yesterday I presented a slide show about punitive billing practices over delinquent accounts to the good folks at the Northshore Utility District (NUD).  Shortly after I finished one of the commissioners informed me of an imminent Kenmore City Council meeting where the council was proposing a 5% “franchise fee” to update the franchise agreement with NUD that they already have.

My immediate thought: update it for what? Nothing has changed.  If it’s already a franchise, and that’s going to continue to be the case, then what’s the 5% for?  The city is just helping themselves to a 5% tax increase on non-trivial water bills, punishing the folks that are hurting the worst and causing some of them to lose access to water.  It’s a regressive tax by another name.  From the city council website:

The City of Kenmore does not currently own and operate water and sewer utilities and instead grants a franchise allowing Northshore Utility District (NUD) to provide water and sewer utilities to Kenmore residents and businesses. The City’s current franchise agreement with NUD was adopted in 2003 and needs to be updated to clarify responsibilities among entities and reflect changes in state law.

The franchise agreement addresses costs the City incurs for operating a franchise, including administration costs and impact on City infrastructure. To help recover these costs, a 5% franchise fee is included in the proposed franchise agreement with NUD. It is expected that customers will see a corresponding increase in their water and sewer utility bills.

“if it looks like a rose…” – #rangothedog

Kenmore City Hall

Kenmore City Hall

I went to the meeting, the first time I’ve ever participated in any kind of politics other than dispassionate voting, and was given the opportunity to speak twice, for three minutes each.  During my first presentation I stated my case about the nature of the tax, disputing the language of “franchise fee” as slippery political gamesmanship and pointing out that it had an impact on the people that are hurting the worst but that it did not present any additional services to justify the increase.  I was not alone in my opinions here, and in fact not a single person in the audience spoke favorably about the proposed ordinance (or the city council proper for that matter).

After the public had a round of comments, the city manager and a partner lawyer that helped write the proposal, made the presentation for the new ordinance.  They justified the 5% increase with comparative analysis, pragmatically thorough but logically specious.  They compared the 5% proposed tax to similar taxes in surrounding, upscale communities where the property valuations are much higher and business environments much more favorable.  And they compared the fee to similar taxes imposed for less critical services such as electricity and cell phone service.

After they presented their case the water commissioner that informed me of the meeting was given an opportunity to speak.  She called me out by name and cited some round figures about the customer base of  NUD that raised the interest of the council.  She didn’t have the figures in front of her at the time but I’ve brought them forward here:

27.3% of customers received a late notice (6,609 of 24,175).
5.4%  of customers received termination notices (1,311 of 24,175).
1.4% of customers were shutdown (349 of 24,175).

Kenmore City Council

Kenmore City Council

After the presentation from the city manager and the comments from the water commissioner, the floor was opened again to the public.  I was cited by name again from some of the people in the audience, and when given the opportunity to speak for the second time I did not hesitate.  During my 3 minute allotment I pointed out the logical fallacy of comparing the tax to the franchise fee rates imposed by the wealthy neighboring communities of Kirkland and Woodinville, and the specious logic involved comparing this life-sustaining service to cell phones or even electricity.  I pointed out how for a small number of people, this tax would be the pebble that started the snowball rolling.  Paraphrasing my closing comments here:

“there is a statistically tractable estimate that can be established based on readily available data sets reflecting the number of people that will lose their water service as the result of this franchise tax.  make sure you’re comfortable with that number” – #rangothedog

I’m going back to the NUD offices soon to see about brainstorming on solutions for delinquent billing policies, including deep-diving on the notion of providing a check box on the water bill to contribute $1 to those that are less fortunate as discussed on this week’s radio show.  And I’m going back to city hall in when they council meets again to discuss this matter.   With any luck:

“none shall pass” – gandalf


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