City Council on verge of raising TV cable fees

In a last-ditch effort to save nine more police and fire department jobs from the budget ax, the City Council is poised to raise the fees it collects from Spokane’s cable television provider on Monday, an increase a Comcast executive said will be passed on to customers.

“We would have to pass the tax on to our Spokane customers,” Comcast’s general manager in Spokane, Ken Watts, said Friday. “We could not absorb that cost.”

From his perspective, the city will be handing Comcast’s competitors, satellite television and Internet providers, a distinct advantage by raising the taxes paid by the cable company from 6 percent to 11 percent to $6.05 a month on an average monthly cable television bill of $55. The average customer is currently paying $3.30 a month in taxes, Watt said.

Council supporters of the proposal do not see it as a tax increase at all, but rather an elimination of a $1.5 million-a-year subsidy to Comcast.

“Essentially the city has been giving Comcast a rebate, and we want to close that,” Councilman Brad Stark said.

Stark was one of six council members voting last Monday to include $750,000 in revenue from the cable fee increase in next year’s budget. Only Councilman Bob Apple opposed the move. The council must still approve a separate ordinance this Monday to authorize the increased collection.

“No matter what you want to call it, the net effect is that the city is asking cable television subscribers to pay more in taxes and shoulder a disproportionate amount of the local tax burden,” Watts said.

Councilman Al French said the revenue stream expected from the move ranges from $750,000 to $1.5 million. The council opted to use the lower figure for budgeting purposes. That $750,000 would save the jobs of five policemen and four firefighters, he said.

With the public’s safety at stake in a tight budget year, French said, “We cannot continue to subsidize the largest cable provider in the nation.”

The city currently levies a 5 percent franchise fee on Comcast, the maximum allowed by federal law, to compensate the public for use of its rights of way. Watts said only cable companies pay city franchise fees. But Washington state law does not prevent local government from also charging cable companies a maximum utility tax of 6 percent.

“The city said, ‘We want to have everybody on a level playing field, so we will apply the utility tax but offset it with the franchise fee,’ ” Watts said, adding that lifting the offset would add a cost that only Comcast’s nearly 60,000 Spokane customers would bear.

Thus, the city has been applying a total fee of 6 percent to Comcast – the 5 percent franchise fee plus 1 percent of the utility tax – “roughly the same as other users of the city rights of way,” Watts said.

“Patently false,” said Stark. “Every business except Comcast pays a utility tax. What’s going on is it’s time to eliminate the subsidy and have them pay their fair share. It’s up to them, having raised rates twice this year, how they are going to come up with this $1.5 million.”

Both Stark and Apple suggested that the council’s proposal and Comcast’s response might have an impact on renewal of the company’s franchise, which is currently being negotiated with the city.

“It will make it more difficult if we are going to tax them more than their competitors,” Apple said.

He opposes the increased collection from Comcast, he said, because it gives Internet and satellite television providers “an unfair advantage.”

Watts said Comcast’s Spokane customers pay $2 million a year in city taxes while satellite television customers pay no local taxes. Walter Neary, Comcast’s public relations manager, said the company has been airing television advertising on its cable programming informing viewers of the proposed increase and letting them know how to weigh in on the proposal.

As a result of those TV spots, the City Council has been flooded with e-mails and letters from angry Comcast customers, Apple said. The councilman said Mayor Jim West also spoke against the proposal at last Monday’s meeting.

“He realized it was an unfair tax and should only be considered in an emergency,” Apple said of the mayor.

West was out of town Friday and could not be reached for comment. The city’s public information officer, Marleen Feist, said the administration has taken no position on the increase, leaving it up to the council to decide.

That decision will be made at Monday’s meeting beginning at 6 p.m. in City Council Chambers.