Tag: "taxes"

Posted November 20, 2013 by dcollado

Thomasville is one of six cities served by Community Network Services (CNS) in rural southwest Georgia. We’ve covered Thomasville and CNS in the past, highlighting the benefits of reliable high-speed broadband in these remote rural communities. But one benefit we haven’t covered yet is quite remarkable - Thomasville residents have been paying zero fire tax thanks in large part to revenues from CNS. The City’s fire tax first hit zero in 2012 and was recently maintained there by a Thomasville City Council vote in September.

Thomasville feeds its General Fund with net income (what the private sector would call profit) from its utility services. For 2013, this net income is estimated to reach $8.5 million. What’s more, Thomasville residents enjoy utility prices below the state average. So nobody can complain the City is taking advantage of utility customers by charging excessive rates.

According to a recent Public Service Commission survey, Thomasville residents pay $3.32 per month below the state average per 1,000 kilowatt hours of electricity. And CNS customers who bundle services see annual savings of up to $420. It’s a true win-win - residents get affordable utilities and the City applies the net income to running public services like the police and fire departments, lowering property taxes in the process.

The result is millions in tax savings for Thomasville residents since 2009, when the City set its sights on phasing out the fire tax. In that year, the City collected $1.7-million in fire taxes. In 2010, the City dropped the rate to bring in $995,000. And in 2011, the last year a fire tax was levied, $610,000 was taxed. Based on the 2009 fire tax collection, Thomasville residents have been spared almost $5.2-million in fire taxes since 2010. Speaking about the zero fire tax accomplishment in 2012, Thomasville Mayor, Max Beverly, said “Without the City's...

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Posted September 19, 2013 by christopher

Monticello Minnesota may be located 40 miles outside Minneapolis, but it is the center of the planet when it comes to FTTH competition. We have tried and cannot identify another community localed on planet earth with two separate FTTH networks going head to head across the entire community.

We have long written about Monticello, most recently to look at hypocritical criticism of the project (which gives me an opportunity to note a similar dynamic in Lafayette, Louisiana). And we have covered the disappointing news that the network has not produced enough revenue to make full bond payments.

Short explanation for how Monticello came to be unique in having two FTTH networks: Monticello had poor Internet access from Charter and telephone company TDS. Each refused to invest after local businesses and elected officials implored for better networks. Monticello started building its own FTTH network (Monticello FiberNet) and TDS sued to stop the project while suddenly decided to upgrade its slow DSL to fiber. Lawsuit was tossed out and Monticello finished its network.

In most community fiber networks, the DSL provider seems to fade away because it cannot offer the fast speeds of fiber or cable, so the market basically remains a duopoly with the community network replacing the telephone company (which continues to offer cheap, slow DSL to a small number of customers). But in Monticello, Charter and TDS engaged in a price war, which has really hurt the City's ability to generate enough revenue to pay its debt.

Price wars are very hard on new market entrants because they have to amoritze the cost of their investment whereas the incumbents often have already done so. This means incumbents can almost always offer lower prices if they are determined to do so.

In many communities, we have lacked clear evidence of predatory pricing - that is pricing below the actual cost of service to run competitors out of business. This would violate federal law (if any agency bothered to enforce it)....

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Posted August 29, 2013 by dcollado

Located in the northeast corner of Tennessee, Morristown Utility Systems (MUS) offers gigabit broadband throughout a region that covers 30,000 residents and businesses. I recently spoke with MUS General Manager and CEO, Jody Wigington, about FiberNET’s progress and he had much to report, starting with over $5 million in cost savings for local businesses, residents, and the local government itself.

Asked about cost savings to Morristown’s city government, Wigington pointed to $840,000 in total savings from a smart meter program - a combination of lower annual power consumption and operational efficiencies. Another $20,000 in annual savings is due to the county not having to pay out-of-town IT contractors to maintain its network because the required expertise can now be found locally thanks to MUS’s dedicated network specialists.

Morristown businesses and residents are also saving, to the tune of $3.4-million annually thanks to FiberNET’s introduction of lower prices in the local broadband market. That’s $3.4-million, every year, which can be spent locally rather than being siphoned out of the community to corporate shareholders.

In terms of revenue, FiberNET generated $8.6-million during the most recent fiscal year and is projected to generate $8.8-million during the current one. FiberNET's solid financials have translated into increases in MUS’s payments in lieu of taxes (PILOT) to the city, which now amount to $350,000 per year, up from $150,000 in 2010. FiberNET’s strong financial performance resulted in MUS becoming cash flow positive just two years after launch, and net income positive after five years. Both of these key milestones were reached significantly quicker than initially projected.

MUS FiberNET’s impact on economic development is also notable. Oddello Industries, a contract furniture manufacturer that relies on FiberNET for its communications, recently announced a $4-million expansion in Morristown, resulting in 228 new jobs. Oddello CEO, Tom Roberts, cited “reliable utilities” among the reasons for investing in Morristown. This growth is part of a larger trend for Oddello, which has grown its Morristown presence from 35 to 415 employees in just the past year. 

Another sign of FiberNET’s impact on economic development is the recent decision by Molecular...

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Posted July 23, 2013 by christopher

Last week, we discussed how Shafter's plans in California for a community fiber network changed with the Great Recession. Today we have an interview with Shafter Assistant City Manager Scott Hurlbert with an expanded discussion of how the community adjusted and what its next steps will be.

Shafter transitioned from leased T1 lines to a city owned fiber network with gigabit connections between municipal facilities. As the network expands, it will do so with independent ISPs offering services as the local government prefers to focus in providing the physical infrastructure rather than delivering services directly.

Unlike the majority of communities that have invested in their own networks, Shafter does not have a municipal electric utility. Nonetheless, local leaders see a fiber network in much the same light as the water system. They expect the fiber network to break even but do not expect large revenues from it - the point is for the infrastructure to enable economic development and a high quality of life that improves the entire community.

Read the transcript from our conversation here.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

This show is 25 minutes long and can be played below on this page or subscribe via iTunes or via the tool of your choice using this feed. Search for us in iTunes and leave a positive comment!

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Find more episodes in our podcast index.

Thanks to Break the Bans for the music, licensed using Creative Commons.

Posted July 18, 2013 by christopher

Rant Warning...

Every state has at least one organization, often calling itself a think tank, that is funded by large corporations to advance their narrow interests, often at the expense of local businesses and the larger public.

Many call these "coin operated" think tanks because they take whatever positions their funders want them to take. Or, a more charitable explanation is that some massive corporations are simply channeling money to those few people who honestly believe that we would all be better off if BP or Comcast or Goldman Sachs had no regulations to worry about.

In Minnesota, one of these is called the "Freedom Foundation" of Minnesota. I tend to ignore them for a variety of reasons.

  1. There just isn't enough time.
  2. They are really, really ignorant. Their papers and posts are so filled with errors in basic fact, it would take a LOT of time to correct them - which brings me back to point 1. (Nonetheless, they are influential because the lobbyists of the companies that fund them distribute their propaganda throughout the capitol that they appear to actually live in.)
  3. Mentioning them can legitimize them.

So here I am, mentioning this group because I just noted a curious example of their utter lack of integrity.

For a few years, the "Freedom Foundation" has worked on telecommunications issues, mostly writing nasty, slanted articles twisting the words of public officials to discredit projects. Given the problems faced by Monticello (as we have covered), they have had a field day there - even tracking down a bondholder that is losing part of his investment.

The fallout from Monticello FiberNet will cost bondholders something like $19 million or about 65 percent of their investment. And the City will likely spend millions in public dollars on the network when it was originally to be paid for entirely by the revenue bonds. This is certainly disappointing. But in Monticello, FiberNet is not the only difficulty - Monticello happens to host one of Xcel Energy's nuclear power plants.

Cost overruns there are taking a $320 million project and turning it into a $640 million project, which will be paid for by ratepayers across Minnesota, including myself.

Yikes, right? I mean if the "Freedom Foundation" is incensed at how unjust it is for...

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Posted July 10, 2013 by lgonzalez

Winchester, Massachusetts, recently offered voters the chance to create a special fund earmarked for school and government technology infrastructure. The question came during the special election to fill an empty Senate seat vacated by Secretary of State John Kerry. The technology fund proposal, to be funded by taxpayers, did not pass but offers an interesting approach for communities seeking to ensure community anchor institutions have the connections they need.

Wicked Local Winchester reported on the "technology stabilization fund:"

Under the proposal, the fund would receive $350,000 from taxpayers in fiscal year 2014. That figure would increase by 2.5 percent each year. Each Winchester household would pay approximately $50 in taxes into the fund in the fiscal year that begins July 1, according to the proposal.

The fund cannot be used for any end-user devices, including computers, laptops or classroom technology like smartboards. Instead, the fund will cover upgrading and maintaining the town and school computer network.

Opposed community members criticized a lack of detailed plans for the fund and challenged whether it would save public dollars. In the days before the vote, some council members publicly questioned the need for technology improvements.

The proposal failed 54 percent to 46 percent on June 25th. Wicked Local Winchester noted that several voters they met at the polls did not know about the proposal before the election. Support seemed strong from those voting yes:

“I think if we’re going to have an excellent school system, we need the technology to support it,” resident Anne Poskitt said after voting at the Jenks Center.

Resident Patricia Shea expressed similar sentiments after voting at the Lynch School, saying that she feels strongly about the importance of technology because she has three children who attended Winchester schools.

“If this is what we have to do to [improve technology], I support it,” she said.

Also from Wicked Local:

Selectman Jim Johnson, who proposed the technology stabilization fund, was...

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Posted April 2, 2013 by lgonzalez

Municipal broadband networks have been gaining traction across the country. It's easy to see why: In many rural and low-income communities, privately offered broadband services are nonexistent. In its 2012 Broadband Progress Report the Federal Communications Commission counted nearly 20 million Americans (the vast majority living in rural areas) beyond the reach of broadband.

The Free Press' Timothy Karr's words are supported by the growing number of pins on our Community Network Map. We connect with places nearly every day where municipal networks fill the cavernous gaps left by the massive corporations. Large cable and telecom providers do not hide their aversion to servicing rural areas, yet year after year their lobbying dollars persuade state politicians to introduce bills to stop the development of municipal networks. Karr reviewed recent efforts to use state laws to stifle community owned networks in a Huffington Post article.

As readers will recall, this year's front lines were in Atlanta, where HB 282 failed. We hope that loss may indicate a turning point in advancing municipal network barriers because the bill lost on a 94-70 vote with bipartisan opposition. If it had succeeded, Georgia would have been number 20 on a list of states that, thanks to ALEC and big corporate sponsors like AT&T, Comcast, Verizon, and Time Warner Cable, have decided to leave their citizenry begging for the private market to come their way.

Time and again, the supporting argument goes like this:

"A vote 'yes' for this bill means that you support free markets and free enterprise," [Rep Hamilton, the Chief Author of HB 282] said [on the House Floor].

A 'no' vote means that you want more federal dollars to prop up cities, Hamilton said.

But Karr points out that some policy makers are starting to question that argument, with good reason. From his article:

"They talk about [the companies] as if they are totally free market and free enterprise, but doesn't AT&T get some tax breaks?" [Rep. Debbie Buckner...

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Posted March 14, 2013 by lgonzalez

Leverett, Massachusetts' broadband initiative has moved to the next phase in bringing fiber to residents. The town selectboard recently decided on a bidder to build the community owned network. G4S designed the network and also works with the Massachusetts Broadband Institute (MBI) as it brings a middle mile fiber network to towns across the western half of the state [PDF of service area].

An article in The Recorder alerted us to the development. Readers will recall that Leverett townspeople voted to ok a modest property tax increase as a way to help finance the ftth build out. From the article:

Indeed, after years of trying to convince private business to develop and offer high-speed telecommunication service in rural western Massachusetts, Leverett’s first-of-its kind network is being built with the help of a $40 million state bond, $47 million in federal stimulus funding and the town’s willingness to borrow to build infrastructure to attract service.

D’Errico said the cost of the project should be lower than $300 a year per median $278,000 property owner over 20 years.

...

...D’Errico said the $300 annual tax addition for the median value property is likely far lower than what residents are paying for their telephone, satellite dishes and cable service connections, and that having the town own the infrastructure likely means that the service contracts should also be a fraction of what they would cost otherwise.

Before construction can start, utility poles will need to be made ready for placement of the fiber optic cable. While this stage of the prep work is expected to take up to six months, hanging the cable would only take about three months.

MBI Logo

Leverett is inspiring other Massachusetts communities, who also want to own the infrastructure that will allow them to...

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Posted March 6, 2013 by christopher

We finally see television news outlets asking the tough questions of bill pushed by powerful cable and telephone companies to prevent giving residents a real choice in cable and Internet service providers. We been covering this Georgia bill closely, and were glad to see this segment:

This video is no longer available.

The segment makes an error in suggesting that tax dollars are commonly used by local governments in building networks. They are not. Most municipal networks are built using revenue bonds, where the community does not pledge its full faith and credit. Instead, they sell bonds to private investors who are then repaid by the revenues generated by the network.

But this mistake is more than outweighed with the reveal at end of the video, that the municipal network in Thomasville allowed the city to drop its local property entirely. Yet another community benefiting tremendously from owning its own network.

Posted January 19, 2013 by ejames

Even as the Internet is changing every aspect of our lives and communities, most Americans are intimidated by confusing jargon and misconceptions about Internet policy. We are developing a series of fact sheets that make these issues understandable to everyone.

We presently have fact sheets from the Institute for Local Self-Reliance and other organizations that cover broadband, financing networks, wireless Internet, economic development benefits from community owned networks, and the public savings from community owned networks.

Stay up to date with these fact sheets and other developments in community owned networks, subscribe to our one-email-per-week list. Once a week, we send out an update with new stories and resources.

Frontier Has Failed Rural America

Despite raking in hundreds of millions in government broadband subsidies, Frontier Communications has failed time and time again to bring reliable, high-speed connectivity to the rural communities it serves. Instead of investing in network upgrades, Frontier has neglected its rural infrastructure to the detriment of its subscribers and the company’s own financials, with its worsening service quality paralleling its plummeting stock value. This fact sheet presents evidence of Frontier’s negligence and suggests that rather than continuing to trust Frontier, government officials should look to publicly owned and community-minded providers to connect rural residents, businesses, and institutions.

Frontier Has Failed Rural America [pdf]

The Opportunity of Municipal Broadband

...

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