consultants are sandburs

Wednesday, October 09, 2013

RAMSEY - FRANCHISE FEES - Is it wise to open up that can of worms? Pandora's Box, where might we end up?

As I research franchise fee online stuff in Minesota, posts may be piecemeal, this one being an example.

It seems wise to think, if valuing limited government, that franchise fees present a "just don't go there" situation.


In City of Cohasset v. Minnesota Power, 798 N.W.2d 50 (Minn. 2011) (reversing Id. 776 NW 2d 776 (Minn.App. 2010)), a trans-shipment gas pipeline was held subject to the town's franchise feeing it to raise revenue. City expenses were held to permissably be so externalized, with town poohbahs then able to tell the citizenry when seeking reelection, see, magic revenue, externalized so we don't raise your taxes but we spend, aren't we cute.

Links are given to both versions of that case, because the reversed appellate opinion presents the counterargument that did not prevail with the Minnesota Supreme Court.

Under the reasoning of that case, decide for yourself, with those big ugly electric transmission lines cutting roughly east-west in northern Ramsey, could our beloved city shake down the line owners much akin to how Champlin and its police department uses Highway 169 as a means to tithe non-residents? Not whether it would be moral or sound or just, Dennis Berg can tell you his thoughts on the Champlin situation, but only, could it be done?

Then, should it? Of course not, but this illustrates the extent of the "can of worms" that Charter prescriptions can forestall, should ill-advised future Ramsey councils look to externalize costs of government in some "franchise fee" fashion that the Cohaset v. Minnesota Power case arguably may permit.

Again, this post presents a "just don't go there" argument, slippery slope and all, in terms of what strange things lurk within this particular Pandora's Box.

If such remote possibility is no problem with this council, what of future councils? Jump off that bridge when we get there, or plan ahead? What's a sound approach? What's best, as policy?

I believe Great Lakes Energy wants additional high voltage transmission line authorization through Ramsey. Wow, if so, we can franchise fee them on it. They won't know what hit them, and town officials can brag about not raising the levy limit too greatly, because ...

What's not to love in all that?


Here's another one for you:

Minn. Stat. 216B.36 MUNICIPAL REGULATORY AND TAXING POWERS, mentions applicable reach to "a cooperative electric association organized under chapter 308A that furnishes utility services within the municipality." Presumably in Ramsey that means Connexus.

You tell me, is Connexus such a thing, per Minn. Stat. Ch. 308A only, 308B only, or both? And does it matter that the franchise fee authorizing statute omits mention of Ch. 308B?

UPDATE: Last sentence of Sect. 216B.36 governs and does not refer to any other statutory sections, " For purposes of this section, a public utility shall include a cooperative electric association."

I have not studied either of those chapters, but there appears on superficial review to be overlap, and it is the kind of hair-splitting question that can be welfare for lawyers well into the balance of this century. Need we go there? Levy limits and parsimonious spending appear to forestall any such need. So why, exactly, is there this will to move that way? To push that envelope, so as to avoid using regular legitimate levy processes up to the limit?

It all seems, for lack of any better word, contrived.

And: Unnecessary.

Here's another one to chew on.

The proposal is to not assess for roads, but to make it a fully funded city expenditure.

Then, they say - earmark a franchise fee for roads, and they make spurious arguments about well, because I own a three million dollar home and yours is worth a hundred and fifty thousand, why should I pay more when we both use the same roads roughly the same way.

Okay, big guy. Your home and personal property benefits from cops patrolling, and you should pay substantially more, disproportionately more for that. Why not?

So we can earmark a franchise fee for cops, and your road-based analogy-argument goes west.

The point is, roads and cops are both governmental functions and the basic premise of property tax is that if you prosper more and have more your societal well being is greater, as is your ability to pay, and for all governmental functions you should pay proportionately more. That is the fundamental premise underlying property taxes.

A graduated income tax is even fairer to those not as favored in society's give and take. It says you are much a fat cat, you pay disproportionately more - but only at the margin with everyone paying the same percentages at the lower income rungs, and we exempt the most destitute (and unfortunately put in loopholes for the wealthy, who also offshore income and wealth); and the premise is we tax income that way because it is the decent thing to do and government should be decent.

The bottom line, general revenue, without earmarking should all go into one pot, and then how it is spent among competing possibilities is what elected officials are elected for deciding. We entrust them to do that, but earmarking this money for such-and-such gets off track from the simple fact that tax-and-spend is ALL governments do, it is their basic and fundamental purpose, and it should be as uncomplicated as feasible.

So try this.

The last council might have proposed a franchise fee, a specific one to pay for Darren's monthly haul.

How would that earmarking grab you?

It was within their power. Instead, general funds were given Darren. While giving Darren money that way was questionable regardless of how raised, how would a franchise fee for Darren weigh on your soul?

UPDATE TO THE UPDATE: The justifying argument would have been that each of us got the same "benefit" from Darren, regardless of the size of house and land the potential for great things (including subsidized-Flaherty in Town Center) to do miracles for taxbase was evenly spread and those great facilities and restaurants would be equally yours and mine to use, so that a flat Darren franchise fee on your energy consumption should have been applied. For Darren. Because Darren's activity tied somehow to your energy consumption, as roads do? Huh? Explain that again. The roads part. How hot I run my home, if wasteful of energy is a "so what," you say flat-fee it because I am connected to a gas line. The utility lines run along the road, that's the only connection, but colocation has nothing to do with maintenance of the roads. There is no logical nexus.

If city government decision making is to not assess for road upkeep, because roads are a general government responsibility, then use general funds.

Levy limits were enacted to quell excesses. Then franchise fees are allowed to evade levy limits. Again, Alice in Wonderland logic, but after all, it is the wisdom on the hilltop in St. Paul, and sometimes they are not our best and brightest.

Last, again, there appears to be a capacity in levying more, but within levy limits, and by City of Ramsey doing that franchise fee avoidance, altogether, is feasible AND with no franchise fee at all, we can have the roads maintained.



No comments: