When private companies use property owned by taxpayers, the Texas Constitution requires they pay a fair value for that use. It is a principle that has protected the interests of Texas taxpayers for over a hundred years.
However, when some of the world’s largest and most profitable telecommunications and cable television companies unleash an army of more than a hundred lobbyists on the Texas Legislature, the interests of taxpayers stand little chance of prevailing.
Two bills are making their way through the legislature virtually unnoticed by the public and the news media that would grant a sweetheart deal worth tens of millions of dollars to those companies at the expense of taxpayers.
Current laws passed by the Legislature in 1999 and 2005 require phone companies to pay fees to run their lines on publicly-owned property based on the number of end users and cable television companies pay fees for the use of public right-of-way based on the percentage of the company’s revenue earned from the use of the right-of-way.
Thus, giant companies such as AT&T, Charter Communications, and Comcast pay one user fee for telephone lines and another user fee for cable television lines when they use taxpayer owned property. These fees are fair to the companies because they only pay for as much use as they are able to sell to their customers and they are fair to taxpayers because the rental fees from the use of public property help pay for maintenance of the right-of-way and for local services such as police and fire protection, streets, parks, and all other services.
House Bill 3535 by Rep. Dade Phelan (R-Beaumont) and Senate Bill 1152 by Sen. Kelly Hancock (R-North Richland Hills) would let these companies pay only one of the user fees instead of both. It is essentially a “buy one, get one free” deal that has no rational public policy justification.
This windfall gift to some of the largest and most profitable companies in the world would blow a hole in the budgets of cities all across Texas — a revenue loss that would have to be made up by cuts in local services or tax increases.
For Houston, the user fee giveaway would amount to an estimated $17 to $27 million per year. In Dallas, taxpayers would get hit for about $9.3 million, and about $8 million in San Antonio per year. Other estimates are Austin ($6.3 million); Arlington ($2.8 million); Sugar Land ($1.2 million); Plano ($734,017); Denton ($669,548); Waco ($373,194); and City of the Colony ($235,000).
In some smaller cities, the impact would be devasting. In my small city of Staples in Guadalupe County, we have no city property tax and rental fees paid by phone and cable and other companies fund 60 percent of the city’s budget. In the city of Tulia in Swisher County, replacing the loss of $33,000 in user fees would require an eight percent increase in property tax collections.
It makes no sense for the legislature to force cities to raise property taxes on our citizens just to grant this unnecessary gift to large companies.
The two bills under consideration have no requirement that the companies pass the fee reductions on to their customers. Some of the companies have announced increases in subscriber charges in recent months so it’s fantasy to believe they will pass their windfall along to customers.
We should expect our legislators to put the interests of Texas citizens ahead of increasing the profits of huge multinational corporations. The tax burden on Texans is already high enough without having to subsidize these companies.
Eddie Daffern is Mayor of the City of Staples and President-elect of the Texas Municipal League.
