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Port Richey Fees, Taxes On Table

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By CHRISTIAN M. WADE

The Tampa Tribune

Published: June 16, 2008

PORT RICHEY - They were among the sparks that ignited a rebellion in this small coastal city.

Franchise fees and utility taxes, which are tacked on to your monthly cable, electric, water and phone bills, long have been a source of discontent for city residents.

Ranging from 5 percent to 10 percent, the fees are charged by municipal governments to utility companies for using their rights of way and eventually passed along to consumers.

For Port Richey, that translates into more than $650,000 a year in revenue. The money goes into the city's general fund, which pays for police, fire and other vital municipal services.

But the added layer of taxation made the city a target of a political action committee that tried, unsuccessfully, for several years to dissolve the 83-year-old city government.

Members of that group, Port Richey Citizens for Lower Taxes, argued that city residents pay more in franchise fees and taxes than people in unincorporated Pasco County.

One of the group's founding members, Mark Hashim - now the vice mayor - made it part of his campaign platform last year, vowing to reduce franchise taxes if elected to council.

A year later, Hashim wants the city to consider such a move.

Tuesday night, council members asked the city's new attorney, Michael J. Brannigan, to explore whether they can lower the fees or even do away with them.

"There are certain ones that we probably can't touch, but there are others that we might be able to reduce," Hashim said. "We need to take a careful look at the fee structure."

Figures compiled by the city indicate that it charges more in franchise fees than Pasco County and other municipalities in the county and Tampa Bay area. The city's utility tax is set at 10 percent; the electric fee is 6 percent; and the gas tax 5 percent.

By comparison, businesses, property owners and residents living just over the city's border in unincorporated Pasco pay no utility, gas, cable or electricity taxes, but enjoy many of the same services of city residents.

"We're definitely at the high end of things," Hashim said. "It's a burden on our residents."

Most of the agreements that provided for the surcharges were signed decades ago and have yet to expire. Others, such as the telecommunications tax, are required by state law.

The fees and taxes are paid by anyone who lives, works or does business in the city.

"It affects everyone in the city," Mayor Richard Rober said. "Not just property owners."

This isn't the first time city officials have looked at reducing the surcharges.

Last year, former Mayor Mark Abbott introduced a short-lived proposal to lower the local telecommunications tax, another surcharge, by 60 percent over the next several years.

The tax - which ranges from 2 percent to 5.1 percent - generates millions of dollars in revenue every year for Florida cities. In Port Richey, where the tax is 5.1 percent, it pumps about $240,000 a year into the general fund to pay for municipal services.

The tax was approved by the state Legislature in 2001, when Florida's cumbersome telecommunications tax structure was consolidated. Municipalities such as Port Richey saw it as another way to generate revenue without increasing property taxes.

John Wayne Smith, assistant administrator for legislative affairs at the Florida League of Cities, said the effort is not uncommon for municipalities trying to reduce the tax burden.

"A lot of cities of have either reduced these fees or done away with them," he said.

The question for council members is whether they can afford the loss of revenue in a year when state-mandated tax reforms have forced them to cut costs.

Council members also have whittled down the property tax rate to $3.90 per $1,000 of valuation and have been considering the possibility of another reduction this year.

That will mean less money to keep the city running.

Reporter Christian M. Wade can be reached at (727) 815-1082 or cwade@tampatrib.com.

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