Is A Franchise Tax A Good Idea For Oro Valley?

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The Town of Oro Valley issued its 2013 strategic plan in January. The 10-page document is available here. The plan set strategic goals in four areas: fiscal responsibility, communication, economic development, and community services.

The fiscal responsibility goal is to "Maintain long-term financial health through diversified revenue sources while investing in community initiatives". Two strategies are defined to implement this goal. One is to ensure the long-term viability of revenue sources to the town. One of the actions listed in this:"Evaluate opportunities to diversify the Town’s revenue sources."

Last week, we wrote about one of the ways the town can diversify revenue sources: a tax on rental revenues. Our purpose in this posting was to begin a dialogue about whether or not that type of tax would make sense in Oro Valley since it is a tax that is frequent  among our northern neighbors.   It is a tax that would not directly affect many of us. However, it would affect some of our newest neighbors and may not be preferable.

Oro Valley's 2013 strategic plan document identifies another revenue source: "Franchise agreements" with utilities.   Unlike the rental tax which would impact only a few residents a  franchise agreement would cost all residents.

In January, we wrote about a franchise tax  In our posting: " Oro Valley Is Considering A Franchise Tax".   We thought that it bears repeating in the form of a second posting because if a franchise tax is ever approved would add another 4% or perhaps even 5% to your utility bill, a bill that is already burdened with a 4% utility tax that is paid directly to the town of Oro Valley's general fund.

What is a franchise agreement? It is an agreement between a utility and the town under which utility's charge an annual fee for the right to use the towns right-of-ways.  That sounds "benign" enough, doesn't it? After all, it's the big bad utility that pays the fee. The town gets a fee.   On the surface, the does not appear to impact residents.

Not so! A franchise fee is just another tax that will appear on the utility bill. You see the utility will not eat the cost of this franchise fee.  Nor will they share it amongst all their customers. They will simply charge it back customers who live in Oro Valley.

Voters would need to approve a franchise fee.

Is a franchise tax a good idea for Oro Valley?

What do you think?
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