Contact: Ron Roach (916) 441-0490
April 1, 1996
Masquerading as fees, trenching taxes threaten California's ability to achieve the world's most sophisticated information infrastructure.
In some municipalities, progress toward the high-tech information superhighway is being exploited for additional revenues. Fees are sought that go way beyond realistic costs of permitting and regulating the digging up of public streets for necessary cables that equip homes for 21st Century communication hookups.
The California Taxpayers' Association (Cal-Tax), for example, recently communicated concerns to Los Angeles Mayor Richard Riordan that his proposed budget for 1996-97 may include trenching fees.
Cal-Tax also has gone on record before the cities of San Diego, Santa Ana and Anaheim, where officials have been considering imposing higher fees -- or taxes -- on utilities.
In these cities, Cal-Tax is on record as not objecting to legitimate fees imposed on utilities or telecommunications companies, as long as the fees defray only the costs of administering permits and inspections.
There are distinctions between taxes and fees that must be observed. For example, taxes should finance general government services with broad benefit to the community, such as law enforcement, fire services and street maintenance.
Fees should support only specific services provided to the payer of the fee, and they should not exceed the cost of the service. If they do, they are by definition, taxes.
Now, however, in an effort to produce new revenue options, cities are proposing to impose utility street cut fees in addition to permit and inspection fees. Despite reports that other factors, such as heavy trucks and severe weather conditions, contribute to pavement problems, cities are looking to up the ante on utilities.
Gouging utilities -- and their ratepayers -- with trenching taxes may discourage a company from providing billions of dollars worth of upgraded equipment needed for the advanced communications systems to compete and thrive in the 21st Century.
Throughout the state, according to utilities, cities are withholding permits, holding up needed improvements, while attempting to extract additional fees.
This is why California needs Senate Bill 1896, sponsored by Cal-Tax and telecommunication companies, and carried by Senator Jim Costa. It would ensure that municipalities do not, for reasons totally unrelated to the ministerial costs of issuing the permits, impose excessive fees on companies proposing to work within the public right-of-way.
The legislation is scheduled for its initial hearing April 15 in the Senate Committee on Housing and Land Use.
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