A perspective from Oregon’s mid-Willamette Valley

Albany: This tax is not a tax

Written July 18th, 2015 by Hasso Hering
The jay perches there free of charge, but Pacific must pay the public "rent"?

The jay perches there free of charge, but Pacific must pay the public “rent”?

Albany city officials say the electric tax they’re about to raise is not a tax. But the effect on ratepayers is the same: They have to pay it.

Two weeks ago, on July 8, the city council failed to complete action on adopting a new city franchise for Pacific Power because Councilor Rich Kellum voted no. The franchise calls for a 7 percent franchise fee, two points higher than the 5 percent privilege tax the city charges now. Lacking unanimous consent for a second reading of the ordinance at the same meeting, the council had to postpone final action until July 22.

On Wednesday, the council will consider a revised franchise ordinance. Since a revision appears necessary, looks like Kellum did the council a favor by not letting them rush this through.

Until now, the city has charged Pacific Power a 5 percent tax on its gross revenue in the city for the “privilege” of being allowed to sell electricity. As now proposed, the city will charge the utility 7 percent.

“The compensation provision of the franchise ordinance does not create a tax,” Finance Director Stewart Taylor and City Attorney Jim Delapoer say in a memo to the council. “Rather, it provides for compensation to the public for the benefits the utility obtains from access to the public right-of-way and for the inconvenience suffered by the public when the utlity must install, maintain or remove its facilities or equipment.”

This reasoning is even more contrived than that underlying the plain old city tax. The public suffers no inconvenience from electric facilities. We are inconvenienced only when the power goes off, and then we can’t wait for the repair crews to arrive. We consider their work a big help, not an inconvenience.

Under rules of the Public Utility Commission, the first 3.5 points of city charges on electric utilities are supposed to be included in the rates as an operating expense, and any additional amounts are to be itemized on customers’ bill, Karla Hunter of the PUC told me. (Outside cities, and for gas and telephone utilities the rules are different.)

Accordingly, Pacific has been including a 1.5 percent itemized charge on Albany bills. If the new deal goes through, the bills will itemize 3.5 percent. This illustrates that while the city pretends to charge the utility “rent” for the use of public space, the entire increase will in fact be borne by Albany households and other electric customers. (Not any federal customers though; the privilege tax ordinance exempts them, and presumably the franchise will too.)

Another twist: While charging Pacific a 7 percent fee, the franchise exempts the utility from the privilege tax. The council memo says the Albany privilege tax on electric service of 5 percent “needs to remain in effect to govern our relationship with Consumers Power Inc.” Three paragraphs later it says that “the current privilege tax arrangement with PacifiCorp is the only example of a unilaterally imposed privilege tax which we currently maintain.”

Questions: What is this “relationship with Consumers Power”? If Pacific really was the only privilege taxpayer, why doesn’t CPI pay it too?

All of this may seem like so much “Inside Municipal Baseball.” But there’s real money involved. The two-point hike in the city electric tax — or “rent” or “compensation” — amounts to about $930,000 a year, and the city budget for 2015-16 is counting on the cash. (hh)

12 responses to “Albany: This tax is not a tax”

  1. Bill Kapaun says:

    Thanks for the info!
    So as it appears, for every $3 we thought we were paying, we were actually paying $10 and the city wants to raise that by 40%.

  2. Gordon L. Shadle says:

    Only in the mind of a bureaucrat can the “public” pay a non-tax and simultaneously be “compensated” by it.

  3. Greg Storms says:

    Nice pun, Hasso!

  4. tom cordier says:

    This issue will be presented as the second reading of the same ordinance initially read on
    July 8th. If fact it is a totally different construct. This is an example of “shuffling-the-pea”
    otherwise known as bait and switch. This reading on 22 July should be considered as the first reading. The existing Franchise fee ordinances have the whole agreement in the ordinance. Why not this time??

    The City shows no interest in reducing costs so taxes get called fees to mask the obvious. The letter says more money is needed to sustain fire and police services.
    Why not layoff City police 24/7 dispatchers since that service is redundant with County
    24/7 work. The County reads electronic Albany maps and dispatches fire and ambulances w/o delays. The City refuses to make that cost reduction

    The “emergency clause” should be removed per Councilman Kellum’s suggestion.

    • Bob Woods says:

      The Sheriff’s Office is the last inherited position in Oregon. For over 50 years the Linn County Sheriffs appoint their own deputy as second in command, then retire a year before the end of their term so that deputy will become Sheriff, well before the next election.

      That stinks. It’s crass manipulation of democracy by insuring a hand-picked successor has a massive advantage in the next election.

      The Sheriff’s Office should not get control of any city taxpayer money until they show that they can quit manipulating the electoral process and allow free and open elections, untainted by an “inherited right” to the job.

      • Bill Kapaun says:

        “The Sheriff’s Office is the last inherited position in Oregon”
        Ever hear of Katie Brown?

  5. Bob Woods says:

    Gee, a reasonable person, including an intrepid reporter, might ask what that additional tax money is going to be used for. But apparently not.

    The money goes to the General Fund, which overwhelmingly means Police and Fire services. So these folks ought to say what they mean: Cut cops and firefighters. And while you’re at it cut the Library some too.

    “Anti-Tax, no matter what” is the religion of the extremists. These fringe folks don’t talk about the real effects of decisions, they just hate government.

    • James Carrick says:

      And Bob, it’s become quite clear that you LOVE government.

      • Bob Woods says:

        “Make love, not war.”

        Of all the government’s on the planet, the US is one of the least to worry about for its citizens.

        For people in Albany, city government should be no worry because its record is exemplary. Right in the middle, just where its citizens are.

        • James Carrick says:

          “Make love, not war.”

          Don’t make me laugh. I had that black light poster tacked to the wall when I was 15 yrs old. I have evolved….have you? Doesn’t look like it.

          There are few things I fear more than the US government and the tyranny it has the capacity to produce. It’s folks such as you that have created that fear by your faith in anything government wants to do is just fine with you.

          You go right ahead and keep your head buried in the late 60’s, as you have demonstrated. The city has it’s hand in our pants to the tune of nearly $1.0 million. That isn’t chicken change.

    • Bill Kapaun says:

      It’s funny how someone that had “middle of the road” political leanings 50 years ago is now an extremist.

      How about the way the Secretary of State (remember the last one?) has manipulated the petition process by disqualifying signatures at their whim, deciding what is acceptable for ballot titles and comments in the Voters Pamphlet.
      Then when the corruption of your current governor becomes too obvious, guess who steps in?

      Talk about hypocritical!

    • James Carrick says:

      Bob, Exactly who in your mind would have made better Sheriffs than George Miller, Ken Goin, Art Martinak, Tim Mueller, Bruce Riley, etc? You are (more than) suggesting some good candidates got shafted by this method you complain about? Name ONE viable candidate……just ONE!

      I have lived in Albany most of my 60 years, far longer than you I presume. I think all of those Sheriffs were stellar in that position and I NEVER heard any real complaints against any of them, at least until Sheriff Mueller penned that letter to Biden about enforcing federal gun laws (and those were from the usual suspect gun grabber lefty extremists that don’t understand the Constitution, and a couple of SCOTUS decisions). Bravo Tim Mueller.

      In politics, the game is name recognition…I’ll give you that. It looks like you’d better get to work to change the way our local government is working…instead of blaming the men that have insured smooth transitions, unlike what has happened more than a few times in Benton County…or would you prefer the fiascos that have occured in Corvallis in the last 50 years?

      You are defending duplication of services in your post, which is a prime example of what we “extremists” (as you call us) complain about regarding bloated government. By the way….it’s not our “religion” either. We accept government’s PROPER role. What we object to is government waste, overreach, and domination over our lives. The list of things we can’t do is getting longer than the list of things we can do. That’s a BIG problem and not what I call freedom. Government NEVER shrinks. It just gets bigger and bigger, needed or not!

      Everytime we turn around, Uncle Sam, the State, or local government has their hand in our pants wanting more, more, MORE!

      ENOUGH! This nation was founded by “extremists.” You best not forget that. The meek get governed by men like Lenin, Stalin, and that guy with the little black mustache….and Obama.

      WHAT exactly would be wrong with a system where each county handles all 911 calls and dispatches to the various jurisdictions as needed? Looks to me like a way to save some considerable money. I don’t think you give a flying flip about efficiency. You defend government and government spending, invariably. Perhaps YOU are the “extremist” here.

      And lastly, you complain about we “extremists” not calling a spade a spade. Well, our esteemed City Attorney parses words with the best of them. Fee, tax…..it’s all the same to those that pay it. And while we’re at it….anyone that doesn’t think renters pay taxes, guess again. ANY landlord worth their salt includes ALL OF THEIR COSTS in the rent they charge. Bob…it’s called positive cash flow. And the only way government seems able to create positive cash flow is by reducing services and/or raising fees (TAXES). NEVER a look at efficiency. I for one, am glad you’ve retired. A good bean counter knows efficiency.

      It’s a tax no matter what you want to call it. We aren’t stupid.

      You “big government spenders” got your new public safety facilities passed. Now, thanks to what you have told us, the city is now finding ways (general fund via privilige tax) to fully staff these facilities….likely beyond need in the near future. Predictable, for sure…and it didn’t take long.

      More than a few of us “extremists” see through your agenda…and we WILL RESIST!


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