Both the Advocate and the Advertiser carried stories on Fiber411’s press conference Tuesday afternoon. On the balance, both stories serve to give the reader valuable background on what “in lieu of taxes” (ILOT) actually is and that has got to be a valuable service. The much more complete story, however, is in the Advocate’s version—something that is unfortunate considering the relative circulation of the two in Lafayette. If you’ve only got time for one today I have to recommend you go to the Advocate.
On What In Lieu of Tax is:
Instead of paying taxes as a private company would, the publicly-owned LUS pays a percentage of its gross billings to the Lafayette Consolidated Government’s general fund.
LUS pays the in-lieu-of tax because, as a government entity, it is not required to pay the normal taxes a business would — such as property or sales taxes.
On What ILOT is Used For:
The $17 million is roughly one-quarter of the entire general fund — about the amount required each year to run the Police Department.
(The conclusion that ILOT saves local taxpayers almost 25% of the taxes they’d otherwise pay to fund city services is unavoidable. If LUS did not exist, private utility companies would never pay nearly that much –25% of a municipal budget — in local fees and taxes. LUS offers fair, competitive pricing. While doing so it shifts the increment of income that a private company would normally send to federal taxes, state taxes, and profit taking to the city coffers. ILOT is a great deal for city taxpayers.)
What Supple is Asking For:
A group with reservations about Lafayette Utilities System’s plan to enter the telecommunications business announced Tuesday it wants the City-Parish Council to pass an ordinance to assuage one of its concerns.
Supple said LUS should forgo paying that in-lieu-of tax altogether, in case revenues don’t rise enough in one year to pay the entire debt service.
Citizens group Fiber 411 announced Tuesday its members will not support the Lafayette Utilities System fiber optics project unless an ordinance is adopted exempting LUS from having to pay certain fees to the city until fiber operations make a profit.
(It should be noted that this is not completely accurate; only Tim Supple pledged to vote yes if his demands were met. The other two members of the group, Bill LeBlanc and Neal Breakfield, said such an ordinance would not eafect their votes.)
What LUS has planned for ILOT:
Huval said Tuesday after the Fiber 411 press conference that LUS already plans not to pay any in-lieu-of taxes until it is earning enough revenue to pay its debt service.
LUS Director Terry Huval said after the Fiber 411 news conference that the city’s plan calls for the communications division not to pay in lieu of tax until the fiber division makes more money than it spends, excluding debt service.
On the Effect that an Ordinance Would Have:
Taking the in-lieu-of-tax payments off the table would not result in lower bills for future LUS communications customers.
State law passed last year requires LUS to charge communications customers for taxes and fees that private communications companies charge their customers — because as a government entity LUS would otherwise be able to charge lower rates.
Requiring LUS customers to pay artificially higher rates than what LUS actually has to charge to cover expenses would be more fair to LUS’ private competition, which was the point of last year’s law.
Whose Concerns Would Be Meet by an Ordinance:
Supple said that if the council passes an ordinance not allowing LUS to pay in-lieu-of taxes on communications, he would vote for the measure on July 16.
The other two members of Fiber 411 attending the news conference said the ordinance would not sway them from voting no.
Huval says Lafayette Government is pleased the group supports the fiber plan.
(Now, I have to say that I think that a little canaille. Still, the logic is hard to argue with. If Fiber411 endorses fiber for Lafayette, and if it thinks that LUS should build a network to provide competition to Cox and BellSouth, and if it wants LUS not to take ILOT out until it’s making money…well then, the rest is just a matter of implementation details, not principle. Since private concerns will not build a fiber to the home network for Lafayette in the foreseeable future, and since competition is good, and since only LUS will provide any degree of network openness, and since LUS won’t give ILOT until it is taking in more than it spends…well then, what are we arguing about that would prevent a yes vote? It is a reasonable question for Mr. Huval to ask.)