House Bill 938

Chair's Name: Larry O’Neal

Committee:   Ways & Means         

House Sponsor: Earl Ehrhart

This bill changes the term “franchise fee” to “franchise tax”. It also prevents a municipality from collecting the tax from unincorporated areas of the county. The bill further requires that any fee, franchise fee, or other similar monetary consideration of any name collected from or passed on to customers of public utilities or companies as a result of franchise agreements or contracts be deemed to be a franchise tax. Municipalities currently imposing franchise taxes or proposing them in the future must hold two public hearing regarding the franchise fees at least two weeks apart.

No franchise tax shall be included in the base rate of a public utility or a company under a franchise contract. A franchise tax cannot be levied or computed based on revenues from customers of a light or power company if the customers are in the business of processing tangible personal property primarily for resale. Finally, a municipality shall not levy a franchise tax for the operation of public utilities within unincorporated areas of a county.

This bill comes to the House Floor under the Modified Structured Rule.

Chairman O’Neal’s opinion of the legislation:

HB 938 addresses the lack of transparency in the levy by municipalities of franchise fees on public utilities which are passed on to utility customers by changing the name of the fee to “franchise tax” and by requiring a statement on the customer’s bill which shows which municipality is receiving the tax.  It also addresses the problem of the pass through of the fee onto customers in unincorporated areas of counties that do not have representation in the decisions to levy the fees by disallowing the levy of this fee on those customers.