Minn. Ops Take On Tax Proposal

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Minnesota cable systems have taken to their own channels in a grassroots campaign against a proposed 5 percent tax on gross telecommunications receipts.

The operators appear headed for an uphill fight, though: the state Legislature has already made about $600 million in budget cuts, only to receive a March financial forecast which estimates that another $400 million more in revenue or spending cuts is needed to balance the books.

The purpose of the tax also makes for a tricky battle. Earlier budget cuts eliminated grants to rural schools and libraries, which used that funding for high-speed T-1 Internet connectivity. The proposed gross-receipts telecom tax would make up for those cuts, said Minnesota Cable Telecommunications Association executive director Mike Martin.

And telecom companies will be arguing against the levy as the state takes drastic measures to cut spending — including a 16 percent tuition hike for state university students, along with other major cutbacks, according to news accounts.

Minnesota's cable operators — which include AT&T Broadband, Time Warner Cable, Mediacom Communications Corp., Cable One Inc., Charter Communications Inc. and Midcontinent Communications — are televising 30-second spots to warn consumers about how the possible tax could affect their bills.

The gross-receipts levy, which has already passed in the state Senate, would affect cable and telephone providers. Companies in those sectors claim their customers already must pay several taxes. According to Martin, 12 to 15 percent of a customer's cable bill now comprises taxes or fees.

The tax bill is just one budget-reconciliation measure now pending before the Minnesota Legislature's joint conference committee. It has stalled due to friction between the House — which has taken a public pledge not to raise taxes — and the Senate, which has proposed such measures as a 60-cents-per-pack levy on cigarettes.

The House's anti-tax pledge is against new general taxes and not service-specific levies, Martin noted.

The Minnesota Constitution calls for a balanced budget by May 20. Because of the legislative stalemate, some lawmakers are lobbying for a break in the negotiations or an adjournment without resolution, Martin said.

"I don't think they really want to do that. They don't want to go home and leave it to [Gov. Jesse] Ventura," the association executive said. "We'll continue to express our opposition."

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