The hidden tax-“Franchise Fees”

Most residents in most municipalities do not even know about the hidden tax known as “Franchise Fees” in fact some municipalities even go to the ridiculous extreme of trying to claim it is not a tax. The quote below was copied from one of these municipalities. Thanks to an awareness created within our municipality over the last two years, the residents of the Crowsnest Pass are not fooled by this sly trick. This “Fee” as become an alternate revenue source used by politicians to create an illusion that taxes are not being raised by a significant amount when in reality they are just taking the money out of your left pocket instead of our right one.

"Are franchise fees a tax? No. Franchise fees are simply the cost utility and cable providers incur for being allowed to place their facilities in the public's right-of-way. Franchise fees are considered a cost of doing business. Franchise fees are an important component of a diversified revenue stream for municipalities."

In 2010 the Municipality of Crowsnest Pass collected $295,551 in Franchise fees this number jumped to $374,288 in 2011, $569,749 in 2012 and was originally budgeted to go to $906,694 in 2013 until the huge out cry by the public. Which led to council having a change of heart and only increasing it to $682,000 for 2013.

2011 increased by $79,000

2012 increased by $196,000

2013 increased by $112,000

2010-2013 increased by $387,000

That is correct in total the “Franchise Fee” increased by $387,000 over those three years a whooping 130 % if these same dollars had been generated by increasing taxes, it would have required additional tax increases of 1.25% in 2011, 2.9% in 2012 and 1.75% in 2013.

Without the public out cry previously mentioned the Franchise Fee would have risen by another $225,000 in 2013 the equivalent of another 3.5% tax increase.

It would be very interesting to hear what position candidates for the upcoming election will take  on Franchise Fees, would they agree that they have gone up more than enough in the last three years? and commit to not increasing them for the next four years?    


Note: Cost of administration $4325 per day

Leadership and $44,000 a year

One of my readers posted the following comment:

"The CNP Employee Code of Conduct says don't:
Post, solicit, distribute, wear or otherwise display political material or Messages in or on Municipal Assets." 

An employee code of conduct is a very important document that lays out to the employees of an organization how they should be conducting themselves in the way they perform their jobs. It really is an issue of ensuring that everybody in that organization acts in an ethical manner, especially when the employer is in essence the taxpayers and so much of the employees duties are conducted in the public eye. Rules are good, should be enforced and should apply to everyone in an organization. 

This leads to the issue of leadership, in any organization if you are going to have a code of conduct then the weight of enforcing it usually falls on the leadership of the organization. In this day and age how can you expect the employees to adhere to the code of conduct when the "leadership" chooses not to? The Mayor states the following "As to our newsletter being political; well, I am the Mayor and I will make some political comments" please take a moment and reflect on his comment versus what the code of conduct says above.

The Mayor has taken the monthly newsletter that should be informing the residents about what is going on in the municipality and turned it into a tool that pushes his political agenda and becomes an opportunity to attack his opposition. In the USSR they used to call it "Pravda"  lets face it there is a reason the Mayor's comments come first.   

Lets get to the $44,000 issue the Mayor states "Please note that this newsletter is budgeted for and falls within our plan to improve communication and transparency. It costs you about $0.65 per month" 

By itself $0.65 does not sound like a lot of money but lets do the math 5600 people at 65 cents a month is $3640 on an annual basis that is $43,680. Is that really necessary? that's a lot of money, imagine for a second how many pot holes could be filled for $43,680.   

Note: Cost of administration $4325 per day

So many questions, the numbers are just not adding up.

Some recent events that have transpired raise some serious questions. The just passed budget and Fire Master Plan for a start, then we have Councilor Saje's letter which raises some serious concerns about when and when not proper procedures are being followed. Councilor Saje's examples are they the only ones where the process was not followed, are their more?

The numbers while we are all basking in the glory of  the Hotel development at the last budget meeting we had a Councilor talking about $240,000 going in to the land reserve fund and making it clear that does not include the money from the CLC site.
Which creates several questions what land is the municipality selling to bring in $240,000 (maybe the Hillcrest Fire Hall? they should tell us) The $300,000 from the CLC site why would that money not be shown going into the land reserves? after all we were told that it is a done deal. Is the money not coming in this year? is the sale conditional and won't come in until next year or even further down the road? Is the money scheduled to go some where else?

Then the Fire Master Plan lets go to page 82 it speaks to a capital and operational savings of $170,000 per year for the next ten years.

On page 50 it shows the operational, capital and debenture cost for Fire and Rescue from 2007-2011. The average operational costs were $391,652 a year, average capital costs of $79,276 and an average debenture cost of $68,156 for a total average cost of $539,084 per year.

On page 52 it shows the operational, capital and debenture costs for 2007-2011.

On page 53 it shows the budget for 2012 of $472,668 for operating budget and $83,756 for debenture for a total of $556,424 not out of line with the previous five years. What it does not show is anything for capital costs, did Fire and Rescue not buy anything in 2012? maybe. Now I know somebody will come back and argue that the actual numbers for 2012 were way lower than budget but that was based on grants the municipality received from the province for crisis management those will not be coming every year.

So now lets take a look at 2013 the new revamped Fire and Rescue Department that's going to save us all kinds of money. Operating budget $437,237, debenture payments of $83,756 for a total of $520,993 not out of line with the average costs from 2007-2011 except during those years there was an average capital costs of $79,276 nothing in 2013 for capital? strange maybe the municipality is not buying anything this year but then I glance at page 81 and it shows capital expenditures for 2012 to 2022 of $808,000 or $80,800 a year which is virtually identical to the $79,276 a year spent on capital from 2007-2011.

So with a total cost of $521,000 for 2013 compared to an average cost of $539,000 for 2007-2011. With an average capital cost of $80,000 from 2007-2011 but nothing showing for 2013.If you take that $80,000 average out of the 2007-2011 that would take the cost down for those years to $459,000. Where are we coming up with a $170,000 a year savings? I love working with numbers but I can't figure this out.

My next post will deal with the $521,000 for this year which I am already scratching my head about.