Over the past few months there has been a lot of discussion over the taxation differences between the cable and satellite broadcasting industries. Much of this debate has been set on a false premise, which is that the Arizona Legislature is the appropriate body to settle any inequities by reducing the amount of fees charged to cable companies by cities and towns. This is where the cable industry and the Legislature are wrong: it is inappropriate for the state to interfere and to give a company a tax break on the backs of Arizona’s local governments.

If the state were proposing to lessen its own revenue with this “tax cut,” the cable bill debate would be entirely different, but they are not. The state is simply giving away cities’ and towns’ license fee revenue to the cable companies.

The facts are quite clear, under H2563, Cable Television; Services, cities and towns lose big. Not only do they lose revenue and public, educational and government programming channels, they lose local authority and control. This bill is basically a two-for-one shot against local governments.

The federal government already places limitations on local governments’ authority to negotiate cable license agreements with cable companies. Allowing for some negotiations at the local level enables cities and towns to accommodate some of their community’s unique interests and needs in their cable license agreements. Under H2563, local governments lose their ability to negotiate items in a cable license contract, which destroys the local control granted by the federal government.

In addition to losing local control, cities and towns will lose vital revenue. For the overwhelming majority of cities and towns in Arizona, H2563 will reduce the level of revenue that they receive from cable companies. It is true that cities and towns do not assess similar taxes and fees to satellite providers. While Federal law precludes such local taxes on satellite services from even being considered, there are other reasons why cable should be treated differently than satellite. Cable companies generate a business profit through their use of public rights of way while satellite companies do not. Under H2563, the public through their local governments will receive less compensation for that use of public right of way, which amounts to a tax cut for one special interest.

Cox has widely promoted the benefits for its average customer under the legislation, even though no protections are provided against future rate increases. In addition, they have failed to tell their customers that they may lose or have to pay more for public, educational and government channels. In addition, cities and towns will be forced to make up for the lost revenue, either by cutting city services or raising the revenue elsewhere.

Let’s keep in mind that the cable companies are, in fact, businesses that are very interested in maximizing their own profits and less about the best interests of the public. The Federal Communications Commission (FCC) recently released a report that indicates that cable rates continue to grow faster than inflation and that rate increases are particularly prevalent in areas where no competition for services exists.

As the bill continues to be considered, I would urge legislators and the governor to reject this special interest tax cut. It will hurt citizens and local governments. The only winner would be cable companies. Please reject H2563 and say no to cable company subsidies on the backs of the public and local governments. —

Kevin Adam is the League of Arizona Cities and Towns legislative director.