St. Albert city council wants to squeeze $3.1 million dollars in electrical franchise fees out of residents, businesses, schools, and provincial government offices.
Why? Is it because councillors know full well how residents feel about increasing their property tax and this allows them to hide behind the utility companies who would be forced to collect the tax on the city’s behalf? It certainly looks like it.
We also might question how this will fit with the city's goal to expand its business base and reduce its dependency on residential taxes. Businesses closely examine all the costs associated with locating to a particular community, including franchise fees, in spite of the mayor’s contention they look only at property tax. This move seems counterproductive to reach that goal.
Councillor Wes Broadhead, who introduced the concept in council, says his intent is to make the new tax revenue neutral, by applying an offsetting reduction in property tax. While this may be revenue neutral to some property owners, it’s very unlikely to be the case for residents in rental accommodations or small business which lease their space. Those folks are obligated to pay the utility bills and anyone who thinks many landlords will be passing along a similar savings in rent better think again.
There are other casualties of the city's plan. St. Albert Public schools say if the city levied a 10 per cent fee it would cost its schools $36,000 to pay the fees and it has no way to recover those funds except to take it out of their classrooms. They don't pay taxes, so they will not get a tax decrease to offset the fees. St. Albert Catholic schools have said the fees would hurt them, but they have not yet revealed the cost. Non-profit groups, housing societies and seniors lodges have yet to weigh in on how the fees could affect them. Councillor Brodhead said he believes schools, provincial buildings and non-profits should be paying the fees.
Public school board chair Kim Armstrong said on Monday that council needs to consider the impact of the franchise fee on people who rent or lease their property.
The St. Albert and District Chamber of Commerce chair Jodie McFadzen says the fees will hurt many current businesses and could discourage businesses from locating here and may make current businesses consider closing or moving. This, along with plans to increase storm water rates, is the latest city move that the chamber says makes St. Albert look like it is not open for business.
Councillor Sheena Hughes has come out strongly against the franchise fee saying, "This is becoming a city council of hidden tax increases and I do not want to explore this any further."
She makes an excellent point. We can only hope her colleagues were listening when Brodhead’s motion returns to council June 25th.
