Everything You Ever Wanted to Know About Franchise Fees, But Were Afraid to Ask.

If you know the meaning of “Wonk”, this is going to qualify me! There are regular comments floating around that if a city is created, they will raise your franchise fees, and force the common ordinary people to pay exorbitant fees to benefit the (fill in blank).

So let’s take a look.

First I’m going to describe the rules as close as I can find them; then I’ll describe the differences between fees in cities and unincorporated area; then I’ll try to put it in perspective of what it means to you. Sorry. This is gonna take a while. And if you get upset about the rules, please don’t shoot the messenger. Also, I've tried to get this right, but as you’ll see, it’s not an easy or obvious set of rules.  If you see an error, please let me know.

GA Power (I know this makes no sense, but here it is):

GA Power collects a municipal franchise fee from all non-city customers, based on their power charges, (about 0.9% of the total power bill). They also collect a municipal franchise fee from customers inside city limits (about 2.4% of the total bill). There is also an unidentified franchise fee on everyone's bill (but it doesn't show up on your bill, because it is included in their base rate). That’s another 1% of your bill. 

All franchise fees collected directly and indirectly from all GA Power customers are effectively put in a pool. They are distributed to all cities in proportion to their size (by some measure).

Natural Gas (all suppliers):

A franchise fee is included in the rate base of all customers, but is only paid to municipalities. It doesn't show up on your bill, but it’s there.

Telephone (land lines only):

Cities may, but don’t have to, charge a franchise fee to LAND-LINE phones.  There is no franchise fee for cell phones. That fee can be up to 3% of the phone charges. Counties cannot charge this fee.

Cable:

Franchise fees are identical for Cities and Counties. The fees are paid either to the County (in unincorporated areas), or to cities. And if you use a satellite provider, there are no franchise fees.

OK. So what does this mean for you and your monthly bills?

GA Power:

Currently our power bills have an add-on line item for “municipal franchise fee” of 1.0801% of power charges (or 0.90% of total bills).  That fee and the unidentified franchise fee (1%) currently are paid to existing cities (not us).

If we create a city, the add-on line item for “municipal franchise fee” will be 2.9109% of power charges (or about 2.4% of the total bill). That fee would go to our city.

The pool of “municipal franchise fees” collected from non-municipal customers would be distributed partially to us. That fee is currently being split among cities like Sandy Springs and Valdosta.

Natural Gas (all suppliers):

If you create a city, there would be no change at all to your bill; however the franchise fee would be paid to your city, rather than to other existing cities. So the fees would be spent improving your area rather than Columbus.

Telephone (land lines only):

If you create a city, your city government may add a fee, up to 3% of your telephone bill as a franchise fee.  That fee would be paid to your city.

Cable:

If you create a city, there would be no change at all to your bill; however the franchise fee would be paid to your city, rather than to the County.

After going through all of this, what’s the net effect on my bill and my life?

Start with the easy stuff:  My Cable and Gas bill will have no change whatever; however those existing franchise fees would go to my city rather than to my county and other cities around the state (Eat your heart out Hahira!).

My phone bill (I have a land line) might go up as much as $0.60 per month on my bundled Comcast bill.  My power bill will go up $1.50 on a $100 invoice (my winter usage), and maybe $3.00 in the summer $200 bills.

So if we create a city, my overall annual cost increase would be around $35. However, my city would get many times that much in funds that are now being distributed to other cities around the state.

So am I worried? I hate to think I’ll have to skip one day a year at Mo’s Pizza to make up for this. But I might be able to handle it.

So why are franchise fees such a big deal to cities?

Like so many taxes (and these are essentially taxes), the burden falls not on individuals, but on businesses (and so indirectly to us).  So you might have almost no franchise tax in your bill, but businesses pay a lot.  Just compare your power usage to Macy’s; compare your telephone bill (if you have one) to Publix Pharmacy; compare your cable bill to a motel or sports bar.