Communications has informed Watertown officials it will no longer be collecting public, education and government fees from city customers starting Feb. 1.
According to Mike Hill, a government relations manager with Charter, this move will result in a reduction of fees collected from local customers and a decrease in the overall amount of fees remitted to the city.
Watertown city Clerk Mike Hoppenrath said the average monthly bill from Charter includes about 16 cents in public, education and government fees. The city receives an average of $12,000 a year from these fees, he added.
Tim Vowell, Charter's director of government relations, compared the public, education and government fees to a “sales tax.”
“We are required to collect fees like a sales tax from our customers and pay it to the city,” Vowell said. “The city can chose either zero or up to 5 percent of our gross revenue and the city of Watertown is at 5 percent.
“It's just like a sales tax,” he added. “We were required to collect it and pay it. So, we were just sort of the intermediary.”
Vowell said the cancellation of public, education and government fees is, in part, tied to the Wisconsin State Statute - Act 42.
“Previously when we negotiated local franchises, it (public, education and government fees) was a requirement of the local franchise,” Vowell said. “At the time that Act 42 was passed three years ago, there was no such requirement, although, at the last minute, there was an amendment put in that would require us to continue to collect and pay fees that were in place as of a certain date - April of the year before.”
Vowell also noted municipalities have had three years to prepare for the cancellation of the public, education and government fees.
“The way the legislation was originally written, as soon as it had passed in January of 2008, this (public, education and government fees) would have gone away,” Vowell said. “Then there was a last minute amendment that sort of sunsetted it after three years. So, another key point is that municipalities have had three years to sort of prepare for this.”
Vowell said the city receives approximately $210,000 in franchise fees per year but the public, education and government fees only make up a small amount of that total. Hill added Charter will continue to collect franchise fees from customers and remit those funds to the city in accordance with the company's cable television franchise.
According to Vowell, the city has every right to do whatever it wants with the $210,000.
“If the public educational and governmental program is important enough to the city, they have way more than enough money to fund that and have almost a quarter of $1 million to do with whatever they want - fill in potholes or build park benches or whatever,” Vowell said.
“We kind of get the rap for, ‘well, you're discontinuing this and your killing the educational programming thing,' and it's like, no, we are actually not,” he added. “The city is choosing to allocate the funds that they receive elsewhere.”
Vowell said he thinks it's a more fair approach for cities to use the franchise fees for programs that will benefit Charter customers.
“The cities are collecting fees from the cable customers and it makes sense to me to allocate it back for the benefit of cable customers rather than allocate it to general fund uses that benefit 100 percent of the tax base,” Vowell said.
Hoppenrath said the city uses the public, education and government fees to fund capital purchases for the community cable channel.
He added the city's finance committee will have to meet soon to discuss how these capital purchases will be made in the future.
Although the city will no longer receive the $12,000 per year in public, education and government fees, Hoppenrath said he is more concerned about the city's franchise agreement with Charter, which is set to expire in 2012. Once that agreement ends the city stands to lose the $210,000 in annual franchise fees.