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Bill aims to cap pass-through tax by LA local govts

Last year, Shreveporters got set up for the same one-two punch that Bossier City government delivered to its abused citizens in the past year, but the area's new state senator hopes to curb local governments' abilities to foist this on any utility user.

Last August, Shreveport's City Council hiked from two percent of sales the franchise fee SWEPCO pays for the monopoly privilege to deliver power to city residents, after the previous agreement expired. State law allows a municipality to charge up to five percent, which of course then the company can pass through to ratepayers, by charging half to them and spreading the remainder around to the entire service area.

The Council narrowly passed the increase, along party lines with all Democrats in favor.
Any hopes that the sole white Democrat on the Council, District B’s Jeff Everson, might be join the more pro-taxpayer, pro-business three Republicans on it were zapped away by his affirmative vote on the amendment to the ordinance that renegotiated the fee that actually was extended twice at its lower level by the previous Council. He called it a tough decision, guardedly passing over whether he thought it was a tax increase, but came down on the side of government by basically saying the city could do more good with it in fixing roads (a companion to the ordinance was to shunt the increase to streets and drainage for the remainder of the year, and then the entire tax to those purposes starting next year) than consumers could do with it for themselves. The ordinance then passed with Republican Michael Corbin joining the Democrats.

Bossier City performed a similar backdoor tax increase last year when their franchise agreement expired, with its leaders nonchalantly observing it would ease budgetary problems, those brought about through the previous poor decision-making by its elected officials, mentioning nothing about how the tax would pass through to Bossier Citians. Indeed, they found opportunity to mention it favorably in preparing the 2011 budget that was the first full year of employing the higher amount. They also soft-pedaled the next nail driven in, rolling forward property tax rates after voters unwisely gave an opening with the renewal of a property tax millage at its previous level.

Given the new revenue enhancement, Shreveport’s citizens may suffer a similar beating. With the tax hike now being passed along, the similar tendency of taking advantage of what the citizenry gives you even if they didn’t intend for it may be in play as when they approved a recent bond measure that would increase millages the city could assess. Mayor Cedric Glover insisted the city would not do that despite higher borrowing authority, but ever since, talk has increased about adding more stuff to the list. One certainty of government is its spending always expands to fill whatever revenues appear available.

But state Sen. Barrow Peacock hopes at least to limit this. Starting next year, his SB 269 would cap the rate at two percent, while his SB 273 would attempt to prevent any charge above two percent from being given to these governments; either would do the job. This could throw a wrench into both cities' planning, forcing them to be better stewards of resources (admittedly, the forté of neither) and would curtail somewhat the practice of putting hidden taxes onto the citizenry.

The Republican deserves commendation for this. Hopefully, a majority of his legislative colleagues will see it the same way this session.

1 comment:

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