Franchise fees are coming to your electrical bill in 2019. St. Albert city council voted 4-3 Monday to introduce an electrical franchise fee in three stages beginning at five per cent in 2019 and rising to 10 per cent by 2021. The fee will be applied to the transmission and delivery charges on your electricity bill and at 10 per cent the fee will raise about $3.1 million. That will be offset by a corresponding decrease in property taxes. The real beauty of it, according to councillor Wes Brodhead, is it’s designed to get money out of those not obligated to pay property taxes – churches, schools and not-for-profits.
A testy Brodhead also disputed the widespread belief that renters are unlikely to see any benefit of the property tax reduction. The three-term councillor should be applauded for his unwavering belief that property owners will do the right thing and pass along the savings. However, altruism is a very difficult commodity to come by, especially given the taxes these property owners have had to pay over the years. Is it not more likely that property owners will believe they are the ones that deserve the break?
Forgetting the renters and non-profits for a moment, the franchise fee is being sold as revenue neutral for property owners. How long that lasts will be up to city council. Will it maintain that revenue neutrality each year as it sets its annual budget, or will it be tempted to spend it? When he first introduced the concept publicly, Brodhead made the point that the city needs a new revenue stream. That’s not the language of neutrality.
Bear in mind that the province allows municipalities to tax electricity delivery at up to 20 per cent. That would amount to about $6.2 million to city coffers in today’s terms. The city’s own discussion paper recognizes that there are a multitude of uses and applications for the additional revenue beyond minimizing property tax increases. Council can use the money to add new services, increase service levels, support non-residential economic development or invest in needed capital growth projects.
The key take-away for taxpayers from the introduction of the electrical franchise fee are the words “new revenue stream.” There isn’t a municipality on earth that isn’t looking for more revenue. In fact, the Canadian Federation of Independent Business recently released a report that shows municipal spending has greatly exceeded population growth plus inflation. St. Albert’s ranking among Alberta municipalities was poor. It won’t take long for the city to find a use for that $6.2 million. And don’t think for a minute it’s going to be for property tax reductions.
