I-69 Section 5 and Fiscal Constraint

logoYesterday, an article in the Herald Times (INDOT seeks local OK to start I-69 work along Ind. 37 – behind a paywall) reported on the recent request from INDOT to the Bloomington/Monroe County Metropolitan Planning Organization (MPO) to include I-69 Section 5 in its Transportation Improvement Plan (TIP) at the April 12, 2013 meeting. The portion of I-69 Section 5 under MPO jurisdiction runs along the State Road 37 corridor from Victor Pike north to just north of Kinser Pike (Section 5 itself extends into Morgan County).

The discussion that I’m amplifying in this posting began in the comments to the Herald Times article above.

A poster named citizen-dmc wrote:

How can INDOT consider this when there is no money to pay for Section 5? 

All of the money was allocated for Section 4.

WHERE IS THE MONEY? Can someone explain.

The precious darlings from INDOT think money grows on trees, but they have not provided any revenue source for the completion of it up to Indianapolis and I-465

Of course this comment refers to the requirement that, for a local MPO to include a project in its TIP (a prerequisite for federal funding), the project must be “fiscally-constrained” — that is, there have to be identified funding sources for the project. Sections 1 – 4 of I-69 (running from Evansville to Victor Pike, south of Bloomington) were funded from the Major Moves program, from the one-time money received by the state through the lease of the Indiana Toll Road. The Major Moves account, however, has now been depleted.  Both opponents and supporters alike of the project have noted that traditional funding sources for road construction (i.e. gas taxes) were unlikely to be adequate to support Sections 5 and 6 — i.e., completion of the highway from Victor pike up to Indianapolis. Therefore, by that logic, the MPO would not and could not approve the addition of Section 5 to the TIP because it is not fiscally constrained.

This is unlikely to be a winning argument, however. There are several developments that I think will allow INDOT to clear the fiscal constraint requirement: additional road funding and a public-private partnership (P3) approach.

Additional Road Funding

This development will probably not have any impact on INDOT’s approach to funding I-69 Section 5 in the short-run. However, it will give INDOT substantial additional “breathing room” to pursue the Public-Private Partnership approach described below.

Pending legislation in the General Assembly would provide INDOT with more funding, by (a) eliminating the portion of the gas tax that is skimmed off the top for the State Police and BMV and (b) redirecting some of the sales tax on gasoline to road funding. Per the usual distribution formula, this additional revenue would be split between INDOT, counties, and cities and towns. Incidentally, although sales tax receipts are up from last year, these two approaches are both essentially zero-sum, and would require cutting of other services in order to redirect this revenue for road funding.

There are also several more long-term approaches under consideration to increase road funding by taxing alternatively-fueled vehicles in a way that equalizes their contribution to road construction and maintenance with equivalent conventionally-fueled vehicles and/or by taxing vehicles by miles traveled (much more difficult to implement!).

I wrote a bit more about these initiatives in Counties Agitate for Increased Road Funding. INDOT could see over $150M in increased funding annually from these legislative changes.

Public-Private Partnership (P3) Approach

Another approach that will allow INDOT to work around (or do an end-run around) the fiscal constraint requirement is through what is, somewhat Orwellianly, called a public-private partnership (P3). The Federal Highway Administration defines P3 as:

“contractual agreements formed between a public agency and a private sector entity that allow for greater private sector participation in the delivery and financing of transportation projects.” (Federal Highway Administration P3 Defined)

 Most often, P3 is seen with respect to operation of existing toll roads. The Indiana Toll Road lease was conducted under a P3 model called Long Term Lease Concession. Numerous toll roads are operated under Operations and Maintenance Concessions, in which contractors are hired to collect tolls and maintain the roads in return for contractually-specified payments.

There are also a number of P3 models that are used to construct new roads. From conversations with various personnel at INDOT, I believe INDOT will be pursuing a P3 model called the Design-Build-Finance (DBF) approach. With DBF, the contractor hired to design and build the road is also responsible for financing it (through commercial debt of some kind). In return, the project sponsor (INDOT, in this case) agrees to make payments to the contractor out of the usual appropriations (i.e., from gas taxes) over a period of time. The payments to the contractor would have to cover the costs of the design/build services themselves, the cost of financing to the contractor, and of course a level of profit to the contractor adequate to encourage them to accept this deferred compensation.

With this approach, the initial costs can be deferred and/or spread out over time. In a way, this is like purchasing a car with a vehicle loan rather than with cash. Rather than a $25,000 payment in one year, you might only have to pay $6000 over one year in car payments. Essentially the buyer is pushing out costs to the future — but the annual costs at the beginning are lower. And further, the law defines DBF arrangements as deferred payments, rather than debt — so the state isn’t even technically taking on any debt with this approach.

Like it or not, DBF this seems to be an end-run around the fiscal constraint requirement, and will very likely be the approach that INDOT takes when it approaches the MPO for inclusion of Section 5 in the TIP in April.

Riverboat Wagering Tax to Monroe County May be Cut

West Baden Springs Hotel
West Baden Springs Hotel

Although I try to avoid too much comment on “live” legislation that may change by the hour, the legislation currently under consideration with respect to casinos in Indiana provides an opportunity to discuss another form of revenue that local governments depend on.

Yesterday, the news agency TheStatehouseFile.com reported that:

“The Senate voted Thursday to strip about $6 million in gambling money away from local governments as part of legislation meant to boost the casino industry.”

The full (and very well-written) article is available here.

Senate Bill 528 makes a number of changes to the statutes affecting gaming in Indiana, including a number of tax cuts designed to make Indiana gambling more competitive, now that a number of neighboring states are allowing casino gambling. Under this legislation, according to the article, the home communities of Indiana’s 13 casinos would lose $27M in revenue. Many of these communities rely on this revenue for funding of their roads programs; this loss will be difficult to make up, even if the various attempts to increase road funding overall this year are successful.

However, under revenue sharing legislation established in 2003, Indiana counties that are NOT hosts to casino gambling (like Monroe County) also receive revenue from the Riverboat Wagering Tax assessed on admissions to casinos. The amount of revenue shared with counties is fixed at $33M annually, and is distributed based on population. The following table shows Monroe County’s receipts from the Riverboat Wagering Tax:

Year Amount
2009  $287,870
2010  $287,870
2011  $287,870
2012  $302,078
2013  $302,078

The amendments to SB 528 that passed on Thursday would reduce the $33M revenue sharing amount by about $6M to $27M. Assuming no other changes to the distribution methods, this legislation would result in about a $55K annual cut in riverboat wagering revenue to Monroe County that would otherwise go into the General Fund.Presumably the increase in 2012 reflected the change in population in Monroe County from the 2010 Census.

Obviously all counties in Indiana will be watching this legislation, which could see a full Senate vote next week, very closely.

For some good background on casino gambling in Indiana, see the following (slightly old, but still very useful) references:

Counties Agitate for Increased Road Funding

Just got back from two days at the annual Association of Indiana Counties (AIC) Legislative Conference, and road funding was indisputably the theme of the conference. AIC estimates that there currently a funding deficit of over $800M per year between the road maintenance needs of local governments and the available funding.

There are several fixes that are “live” this year in various bills under consideration by the General Assembly. Since these issues are included in multiple bills from the House and Senate, as well as the budget proposals from the House and Governor, and because these bills are constantly changing, I’m just going to describe the general principles here, rather than attempt to itemize each piece of legislation and its associated impact on road funding.

1. Eliminate “Diversions” from the Gas Tax

Although the 18c per gallon state gas tax was intended to provide road construction and maintenance funding to INDOT and local units of government, currently $144M of the gas tax is diverted to other uses, including the Indiana State Police and the Bureau of Motor Vehicles. Several legislative initiatives, including HB 1125 (Saunders), HB 1363 (Huston), and the budget propose to eliminate these diversions, which would restore approximately $42M in road funding to Indiana counties.

2. Redirect the Sales Tax on Gasoline to Road Funding

In addition to the 18c gas tax, the Indiana (along with 11 other states) levies an ad valorem (based on value/price) sales tax on gasoline purchases (the usual 7%). However, this sales tax on gasoline goes into the general fund,  just like sales tax on other purchases, and does NOT go towards the funding of roads at all. Several bills propose to redirect the sales tax on gasoline to roads, either directly (i.e. the sales tax on gasoline purchases goes to road funding) or indirectly (1.5% of the total sales tax collections, which is approximately the amount of sales tax on gasoline, is redirected to road funding). It appears at this point that the 1.5%-of-all-sales-tax solution is the one most likely to survive.

If both of these strategies are successful, the result will be approximately $250M annual increase in road funding. If this funding is divided up to the various entities (INDOT, county governments, city and town governments) using the usual Motor Vehicle and Highway (MVH) formula, the result will be approximately:

  • $132.5M increase to INDOT
  • $68.15M increase to counties
  • $49.35M increase to cities and towns

3. Capture of Additional Revenue from Alternative Fuels/Low Fuel Consumption Vehicles

This is the most open-ended and controversial of the approaches to increased road funding. The principle is that all vehicles create demand for road construction and maintenance. The two primary sources of revenue for road construction and funding are vehicle registration fees and the gas tax. The vehicle registration fee is a proxy for the existence of a vehicle, and the gas tax is a proxy for its use. Both of these components already take account of the weight of a vehicle, which is a major factor in the maintenance demands on a road.

However, vehicles that use fuels other than gasoline (e.g., compressed natural gas, electric-gasoline hybrids, electric vehicles) do not pay the same gas tax as other vehicles of an equivalent weight — and therefore do not contribute equitably to the construction and maintenance of roads. As an example, consider two Honda Civics, one a hybrid and one a conventional gasoline engine. Both will be approximately the same weight (actually, the hybrid is a bit heavier), and exert approximately the same wear and tear and demand on the road network. For a given number of miles driven on the road, the driver of the conventional Civic will pay more towards the construction and upkeep of the roads than will the driver of the hybrid Civic, despite essentially equivalent demands on the roads.

From the perspective of road funding, this is unfair. Obviously there are other policy goals besides fair funding of roads; there are numerous public policy benefits to use of vehicles that use less gasoline, including potentially fewer carbon emissions and less depletion of nonrenewable resources. However, looked at through the lens of road funding, it is reasonable to attempt to equalize the revenue generated from all vehicles of a given weight class, regardless of fuel type. 

There are a number of potential approaches to resolving this issue, including fuel taxes on certain alternative fuels (compressed natural gas and liquefied natural gas), user fees for mixed fuel and electric vehicles, and — most controversially — a tax on vehicle miles travelled (VMT). The controversy from a VMT tax comes primarily from how the data is captured; it is difficult to capture the actual miles travelled by a particular vehicle without raising serious privacy concerns. I’ll write more about the different potential approaches to assessing a VMT tax in a future blog post.

One thing is clear from this current round of legislation — the amount of additional revenue to be generated from taxing alternative fueled vehicles is currently very small (estimates for current legislation are around $4.5M); however, as alternative fuels continue to increase in popularity, the differential in gas tax receipts between conventional and alternatively-fueled vehicles of a particular weight class is only going to grow.

2013 Budget Orders for Monroe County Released – Property Tax Rates for Monroe County

Stinesville City Limit
Stinesville City Limit

Monroe County and other local units of government in the county just received their 2013 budget orders from the Indiana Department of Local Government Finance. This is the official notice of state approval of the budget, property tax levies, and property tax rates for all funds that receive property tax revenues. A look at the property tax rates for each taxing district (area of the county in which tax rates are uniform within the area) shows few surprises:

Taxing District 2012 Rate 2013 Rate Increase (Decrease) % Change
Bloomington City – Richland Township 2.3710 2.2895 (0.0815) -3.44%
Ellettsville – Bean Blossom 2.4539 2.2131 (0.2408) -9.81%
Ellettsville Town 2.4504 2.2100 (0.2404) -9.81%
Bloomington City – Van Buren Township 1.9766 2.0582 0.0816 4.13%
Bloomington City – Perry Township 1.9390 2.0196 0.0806 4.16%
Bloomington City – Bloomington Township 1.9395 2.0194 0.0799 4.12%
Stinesville Town 1.7597 1.6146 (0.1451) -8.25%
Bean Blossom Township 1.6685 1.5393 (0.1292) -7.74%
Richland Township 1.6680 1.5390 (0.1290) -7.73%
Bloomington Township 1.4208 1.4652 0.0444 3.13%
Van Buren Township 1.3719 1.4180 0.0461 3.36%
Polk Township 1.3944 1.4060 0.0116 0.83%
Clear Creek Township 1.3016 1.3393 0.0377 2.90%
Perry Township 1.2695 1.3073 0.0378 2.98%
Salt Creek Township 1.3506 1.2318 (0.1188) -8.80%
Indian Creek Township 1.2017 1.2293 0.0276 2.30%
Benton Township 1.1679 1.2194 0.0515 4.41%
Washington Township 1.1583 1.1929 0.0346 2.99%

The district with the highest rate is the tiny area of Richland Township within the corporate limits of the City of Bloomington. This is a small, all-commercial district, and is atypically high, for that reason. Of the districts that include residential properties, the two Ellettsville districts have the highest tax rates, followed by the Bloomington districts and then the tiny Stinesville district. After that are the unincorporated areas of the county, with Washington Township showing the lowest rates. As I have mentioned before,  it is to be expected that taxing districts that include a municipality will have higher tax rates than those outside of a municipality, because the municipal districts will include all of the tax rates of the township that the district is in PLUS the tax rate for the municipality.

The other thing of note in the data is that, although some rates increased and some decreased from 2012 to 2013, the decreases far outpaced the increases. This is typical of a community that is growing steadily (adding assessed value) but not taking on substantial new debt or receiving excess levies. The substantial (8.8%) decrease in the Salt Creek Township tax rate was also an anomaly; a dispute between the township and the City of Bloomington Fire Department, which provides fire protection caused no fire protection tax rate to be assessed in 2011. 2012’s tax rate included both 2011 and 2012 fire protection services, so 2012’s rate for Salt Creek Township was artificially high. 2013 saw a return to a more typical tax rate for the district.

The full Monroe County 2013 Budget Order is available here: Monroe County 2013 Budget Order

Ohio Governor Proposes “Frack Tax” — But Concerns Lie Ahead

An article in the Cincinnati Enquirer today discusses the proposal of Ohio Governor John Kasich to create a new “frack tax” — a severance tax (a tax on the extraction of a nonrenewable resource) on the sales of oil and gas — that Kasich estimates will raise around $413M by 2017. The Governor, however, is proposing to use this new revenue to offset a proposed cut in individual and corporate income tax.

Of course oil and gas industry representatives claim this tax could result in less investment in oil and gas production in Ohio. This threat is almost certainly without merit, given the potential profits to be made from extraction from Ohio’s Utica shale (not to mention that there is a good argument to be made for disincentivizing fracking, although again, a tax is unlikely to do that given the potential profits).

But the interesting argument, from a tax policy perspective is that, as the article discusses, this tax as proposed could potentially put Ohio in a bind down the road a few years. As with any extractive industry, particularly one with such global price volatility, revenues are not predictable and will inevitably decline. If Ohio uses the frack tax to offset cuts in the (much more stable) income tax, the state could face a revenue crisis if and when oil and gas revenues decrease — and it is unlikely that state elected officials will find the political will to raise the income tax back up when the need arises.

Indiana will be facing the same situation with its gambling tax revenue.  Created to offset a number of other taxes, gambling revenue has been remarkably stable in Indiana in the past; however, new casino development in neighboring states — Ohio, in particular — will undoubtedly cause the revenue to decline substantially.

It is often politically more palatable to replace a broader-based tax (like income or property) with a more narrowly-based excise tax. But jurisdictions that do this frequently find themselves in a budget crisis down the road when the excise tax revenue becomes unstable or declines.

The frack tax is ultimately a positive development. However, it should not be used to allow corresponding cuts in income taxes. Instead it should be used for one-time investments (infrastructure repairs, for example) and to add to reserves, particularly since there may be long-term environmental costs of fracking that aren’t yet known.

Karst Farm Greenway Plans Advance

Great news for the Monroe County active transportation network! Monroe County Government received final certification from INDOT that the right-of-way for Phase 1 of the Karst Farm Greenway has been completely acquired. This means that bids can be opened on July 10, 2013, with construction to follow immediately thereafter. If the weather cooperates, we could be using the trail by the end of the year.

Karst Greenway Phase 1The Karst Farm Greenway will form the north-south backbone of the County’s active transportation network. Phase 1 will run from Karst Farm Park at the south to Vernal Pike at the north, and will connect many sites and amenities on the west side of the county, including Karst Farm Park, Grandview and Highland Park Elementary Schools, Ivy Tech State College, the Indiana Center for the Life Sciences, and the new YMCA.

Karst Farm Greenway Phase 1
Karst Farm Greenway Phase 1
















This moment has been long in the making. The trail should have been under construction by 2010 — but several complicated land acquisition issues delayed it for several years. Plans for Phase IIA — the next phase of the trail that continues north to Loesch Road are proceeding much more quickly. In any case, this milestone means very good news for the residents of Monroe County!




Analysis Shows Indiana Tax Structure One of the Most Regressive

The Institute on Taxation and Economic Policy (ITEP), a non-partisan research institute, just released the fourth edition of their landmark study “Who Pays? A Distributional Analysis of the Tax Systems in all 50 States.”  The study analyzes the tax structures of all 50 states — the  degree to which each state relies on the different types of taxes (income, property, and sales and excise taxes), the rate structures of each of these taxes, and the overall rates paid by different income groups of taxpayers.

Indiana, unfortunately, made #9 on the list that the authors call the “Terrible 10” — the 10 states with the most regressive tax structures (i.e. tax structures in which the share of family income paid in taxes goes down as income goes up).

In Indiana, the poorest taxpayers (those in the bottom 20% of the income distribution) pay 12.3% of their income on average in state and local taxes. On the other hand, the top 1% pay only 5.4% of their incomes in state and local taxes. Features that make Indiana’s taxes more regressive includes the flat income tax rate and relatively few low income tax exemptions, as well as its dependence on sales and excise taxes. Mitigating factors include the refundable Earned Income Tax Credit and the fact that groceries are exempt from sales tax.

Just as a point of comparison, it is probably not surprising that Vermont has one of the least regressive tax structures. In Vermont, the bottom 20% pay 8.7% of their income in state and local taxes, while the top 1% pay 8%. Not progressive (as the Federal tax system is) — but not nearly as regressive as many other state and local systems.

The study also provides an analysis of the regressivity of various types of taxes. In general, sales and excise taxes are highly regressive — particularly if groceries are included in the base (fortunately in Indiana they are not). Property taxes are mildly regressive. Income taxes can range from mildly regressive to progressive, depending on the way the local income taxes are structured.

Rounding out the Terrible 10 are:

  1. Washington
  2. Florida
  3. South Dakota
  4. Illinois
  5. Texas
  6. Tennessee
  7. Arizona
  8. Pennsylvania
  9. Indiana
  10. Alabama

Cable Franchise Fees in Monroe County Government

IN53-MoCoGov has enjoyed a long winter slumber — but it is time to get moving again. A lot is happening in local government, and of course our friends in the General Assembly are at it again.

House Bill 1432 — Eliminating Cable Franchise Fees

House Bill 1432, which is currently in committee in the Indiana General Assembly, would eliminate the franchise fees that cable companies (actually “video service providers”) that are regulated by the Indiana Utilities Regulatory Commission pay to local units of government, in return for use of the public right-of-ways for their wiring systems. As you might imagine, this bill is being very heavily lobbied by the cable industry — and there are some legitimate arguments that the franchise fees are market-distorting (there are many providers of video services, including satellite, that don’t have to pay any fees to local government).

In 2012, cable franchise fees from the three cable providers serving Monroe County (Comcast, AT&T, and Smithville), brought in $527,064 to Monroe County Government — revenue that would be nearly impossible to make up and would result in noticeable cuts in service from County Government.

Community Access Television Service

The biggest expenditure from cable franchise fees in Monroe County Government is on CATS — our Community Access Television Service. CATS, organized as a department of the Monroe County Public Library, receives funding from the City of Bloomington, Monroe County Government, and the Town of Ellettsville. CATS provides televised access to local government and other community meetings. They are there gavel-to-gavel for every County Council meeting, every County Commissioners meeting, every City Council meeting, school board meetings, etc. I believe that having these meetings televised and available to the public is absolutely central to a transparent local government — and without cable franchise fees funding, CATS would not be able to provide such extensive and accessible coverage of local government meetings.

In 2012, CATS TV provided:

  • Coverage of 407 Government meetings for the City of Bloomington, Monroe County, and Town of Ellettsville, plus MCCSC and RBBCSC and the Library board
  • 400 Community events
  • 1,558 Patron-produced programs
  • 109 Public service announcements, including Candidates on Demand
In the library’s August 2012 community survey (n=746 Monroe County residents) they learned that, at least a few times a year:
  • 69% watch City government meetings.
  • 58% watch County government meetings.
  • 60% watch educational and cultural programs.
  • 31% watch SCOLA international news.

(These stats are courtesy of library director Sara Laughlin).

We cannot afford to lose funding for CATS. Transparency in government must be considered an “essential service”, and without cable franchise fees revenues, our local governments here in Monroe County will have to find some other source to support public access television.

Cable Franchise Fees Revenue

The following table shows the revenues that come each year to Monroe County Government each year from cable franchise fees, as well as the expenditures from that revenue on CATS (labeled CATS Expenditures) and on other government services (labeled Non-CATS Expenditures).

Year Revenues CATS Expenditures Non-CATS Expenditures Total Expenditures
2001  $241,669  $84,914  $192,349  $277,264
2002  $224,070  $100,000  $186,254  $286,254
2003  $286,757  $100,000  $131,483  $231,483
2004  $384,248  $100,000  $196,445  $296,445
2005  $357,986  $90,000  $201,017  $291,017
2006  $370,941  $100,000  $178,931  $278,931
2007  $392,091  $110,000  $151,793  $261,793
2008  $434,796  $151,574  $140,466  $292,040
2009  $430,168  $200,000  $145,966  $345,966
2010  $450,848  $216,000  $179,465  $395,465
2011  $539,286  $221,000  $335,361  $556,361
2012  $527,064  $221,000  $497,130  $718,130
2013  $527,064  $227,330  $408,900  $636,230

The following graph shows how the revenue has changed over the past 10 years.

Cable Franchise Fees 2001-2012

For most of the last decade, it has increased steadily. The last two years saw a leveling-off and even a slight decline. This decline will likely continue, as clearly there are far more technological choices available to consumers today for video delivery, including satellite and other wireless options, so cable franchise fees may not be a sustainable revenue source in the long run. But local governments will need the ability to develop alternate revenue sources to maintain the services currently supported by these revenues.

Cable Franchise Fees Expenditures

So, other than community access television, what does Monroe County Government spend this revenue on? Although the revenue is not legally restricted, and can be spent on any lawful expense of county government, if appropriated by the County Council, the general principle has been that this revenue has been raised through fees on communications lines, and should be spent on communications-related expenses.

In 2011, the following expenditures were made from cable franchise fees revenues:

  • $221,000 for support of CATS
  • $141,784 for telephone and data services for Monroe County Government
  • $59,228 for radio service for the Sheriff’s Department
  • $120,025 for software licenses for Monroe County Government
  • $3970 for lease of equipment in the Monroe County Extension Office
  • $5000 for the WFIU weather alert system
  • $5351 for maintenance on the Human Resources management software for county government

In 2012, we spent:

  • $221,000 for support of CATS
  • $134,906 for telephone and data services for Monroe County Government
  • $29,333 for radio service for the Sheriff’s Department
  • $98,721 for software licenses for Monroe County Government
  • $3270 for lease of equipment in the Monroe County Extension Office
  • $12,000 for licenses for a grants management system to manage over $19M in grants to Monroe County
  • $5000 for the WFIU weather alert system and $2000 for the WFHB weather alert system
  • $2970 for maintenance on the Human Resources management software for county government
  • $4698 for GPS field tracking equipment
  • $116,230 in technology upgrades to the Nat U. Hill room

The last expense deserves a bit more note. Until the recent courthouse renovation, technology to support meetings in the Nat U. Hill Room (the room in which all county council, commissioners, plan commission, board of zoning appeals, etc. meetings are held) was almost non-existent. Although laptops and projectors were available, presentations were almost unreadable as broadcast on TV, making it difficult for the public watching the meetings to see the same materials that meeting participants were seeing. Further, there was no permanent CATS TV installation in the room, so every single meeting required almost two hours of setup by CATS staff, and a half hour or so of teardown.

When the courthouse was renovated, the County Council appropriated funding out of the Cable Franchise Fees Fund to upgrade the meeting room to add two monitors, which allow meeting participants and the public to more easily view presentations, and to add a permanent CATS installation. Further, the monitor video feeds also now go directly into the CATS TV feed, so presentations are much more readable to the public. This means more CATS can cover more meetings, since it doesn’t require such an enormous investment in staff time to setup and tear down from meetings, and it means better meeting broadcast quality to the public.

Cable franchise fees expenditures in 2013 look to be very similar to 2012 (other than the one-time expenditures on upgrades to the meeting room). Council appropriations for 2013 are:

  • $227,000 for support of CATS
  • $150,800 for telephone and data services for Monroe County Government
  • $40,000 for radio service for the Sheriff’s Department
  • $190,000 for software licenses for Monroe County Government
  • $3600 for lease of equipment in the Monroe County Extension Office
  • $12,500 for licenses for a grants management system
  • $5000 for the WFIU weather alert system and $2000 for the WFHB weather alert system
  • $5000 for maintenance on the Human Resources management software for county government

What’s Next?

All of the expenses paid for by cable franchise fees are essential. Some are highly visible, like CATS TV and the weather alert systems for local public radio stations. Others are not as flashy — maintenance fees on software applications and data services used to maintain county government, an organization with over 500 employees and a budget of over $60M. All would require some other funding source if cable franchise fees were eliminated. All will ultimately require some other funding source in the long run as franchise fees revenues decline naturally. However, local communities — and counties in particular — are hamstrung by the state in terms of their abilities to raise revenues. Although we do have limited home rule, we do not have meaningful home rule– and we certainly don’t have it where it counts, in terms of taxation. That is really the big issue here.

On the particulars of cable franchise fees, we at least may have received a bit of a reprieve. Yesterday at the League of Women Voters Legislative Update, Representative Eric Koch (R-Bedford), chair of the Utilities and Energy committee, said that the bill would not receive a hearing this year, in order to give legislators more time during summer study committees to study the data on how local governments are using the franchise fees revenues (data which is not due until later this year).

Despite this temporary reprieve, it is likely in the foreseeable future that cable franchise fees will be changed — maybe by reducing them and adding fees to satellite operators, but probably more likely in reducing or eliminating them entirely. The broader story is that local communities — local governments — need to have a greater say in raising revenue for government services.  If franchise fees are eliminated, we will need some alternate revenue source, particularly to support public access television. Budgeting is always about setting priorities — and as public access television is one of the few things that county government supports that it isn’t statutorily required to support — without a revenue stream, we would not be able to fund it — at least not anywhere near the level that we currently do. And that would be a shame for our democracy.