Bill would kill taxes on some utilities

Thursday, March 24, 2005 | 11:18 a.m.

CARSON CITY -- Lawmakers are considering doing away with franchise taxes on utilities and telecommunications, a move that would save Clark County residents tens of millions of dollars a year.

Last year, for example, Clark County residents paid more than $80 million in franchise taxes, officials said.

Sen. Randolph Townsend, R-Reno, is pushing Senate Bill 277, which would phase out those taxes. Abolishing the taxes would save the average household "hundreds of dollars a year," Townsend said. His Commerce and Labor Committee introduced the bill Wednesday.

Townsend said he wants to do away with the taxes because they "are driving up the cost of utilities," and consumers "receive nothing in return."

Additionally, Townsend said, "Southern Nevada doesn't need the revenue."

But Dan Musgrove, representing Clark County, strongly disagreed. He said the loss of the revenue "could be devastating to us." He said the franchise fees have "kept us even."

"Without the franchise fee, there would be less money per capita than 10 years ago," Musgrove said.

The bill would phase out the franchise fees starting in July, when cities and counties would be restricted to charging no more than 3 percent on the utility's gross revenue. In July 2006, the fees would drop to 1 percent and then in 2007 they would be abolished. Townsend said Clark County customers of Nevada Power Co. pay $53 million a year in franchise fees. Cable television users paid $14 million in Clark County; gas customers were in Clark County hit with $11 million and telephone users pony up $12 million to $13 million.

Musgrove said Clark County received $42.1 million from fees on telecommunications, electric, natural gas, cellular and cable TV. Southern Nevada cities also reaped tens of millions of dollars in franchise fees.

George Stevens, chief financial officer for Clark County, said the $42.1 million makes up about 5 percent of the counties budget. Franchise fees can be as high as 5 percent in the county, but also can be lower based on a variety of factors, Stevens said.

If the local governments need more money, Townsend countered, they should approach the voters for approval of a property tax increase.

Musgrove said this would hurt local governments, especially in view of the drive now to put a cap on the property tax.

John Slaughter, management services director of Washoe County, said it has a 2 percent franchise fee, so Townsend's proposal would not hit Washoe as hard as some other local governments. But, Slaughter said, if the bill passed it would be a double-whammy with the expected cap or freeze on property taxes.

Slaughter said Townsend told Washoe County officials about the bill before the Legislature convened.