News

California Ops Back Plan to Curb Fees

11/05/2000 7:00 PM Eastern

California cable operators will have more at stake this Election Day than most businesses watching for turnover at the Statehouse.

The cable industry has joined a coalition to support a statewide initiative that would curb cities' and counties' ability to craft new levies and call them regulatory fees, rather than taxes.

The initiative, Proposition 37, would not affect costs that in the past have been liberally applied to cable, such as franchise fees, possessory interest or utility taxes. However, it could have an impact on newly crafted right-of-way fees.

California law prohibits local governments from raising taxes unless the levies are approved by two-thirds of voters. Some businesses believe governments have skirted that prohibition by creating new "fees," which require only consent from a majority of elected officials.

Proposition 37 was intended to counter a surge in the number of "impact fees", which local governments use to correct damaged caused by growth or manufacturing. Those funds are sometimes used for broader purposes.

An example some called the flash point was a fee assessed to paint manufacturers and others. It was levied to fund screening for lead poisoning in children and to identify sources of contamination.

The Sinclair Paint Co. challenged the charge, calling it a tax because the money was for a program of broad community benefit. But the California Supreme Court disagreed, determining in 1997 that the charge was a fee.

The initiative will affect any fee authorized after July 1, 1999, and imposed for the purpose of addressing health, environmental or other "societal and economic" concerns. Those fees would be subject to the same voter-approval requirements as taxes.

Businesses say the initiative could curb moves like a fee on fatty fast food to fund obesity studies.

According to the latest filings with the California Secretary of State's office, the California Cable Television Association is a minority supporter of the initiative, contributing $40,000 of the approximately $250,000 donated for the measure so far.

"We're not spending a lot of time on this," said CCTA spokesman Paul Fadelli.

However, association members face a variety of taxation scenarios as communities redefine telecommunications services. The association supports legislation that would provide some measure of legislative consistency throughout the state.

Other supporters include the California Chamber of Commerce, taxpayer groups, growers and manufacturers.

Most Proposition 37 supporters are tobacco companies and beer and wine distributors, which doesn't help the cause. Opponents, including the League of California Cities, the League of Women Voters, environmental groups and anti-pollution crusader Erin Brockovich call it the "cigarette and alcohol protection act."

Debate on the issue has also been lost amid presidential election rhetoric and constant ads for school-funding initiatives.

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