As city commissioners work on creating a 2007 budget, they’re considering more than just increasing people’s taxes. They’re also contemplating action that would raise everyone’s electric, cable and telephone bills.

Commissioners were told at a study session Thursday that they could generate about $1.1 million in additional revenue for the 2007 budget if they increase – to the maximum amount allowed by state law – the franchise fees the city charges to utilities.

Utility companies generally said they were fine with the idea as long as everyone understood the money ultimately would be coming from Lawrence residents.

“It is definitely a total pass-through cost for us and all the other providers,” said Brett Sayre, director of external affairs for AT&T. “It is the citizens of Lawrence who would be footing the bill for this.”

Under the proposal, a person’s electric, phone and cable bills would increase by a total of about 5.75 percent per month. Franchise fees are charged based on a percentage of each user’s bill, minus taxes and other fees.

Specific rate increases would be:

¢ A 3 percent increase in phone bills, with the franchise fee increasing from 2 percent to 5 percent.

¢ A 1.75 percent increase in cable bills, not including Internet service, with the fee rising from 3.25 percent to 5 percent.

¢ A 1 percent increase in electric bills, with the fee increasing from 4 percent to 5 percent.

City commissioners expressed interest in the idea.

“I think it is an equity question,” City Commissioner David Schauner said. “Whether it is passed along or not, someone has to pay for the costs. I think it is better that it be people who are using the service rather than an elderly person on a fixed income who is paying for it through property taxes.”

And city staff members said there was “strong justification” for the increased fees. Interim City Manager David Corliss said the city continually was paying higher prices to purchase right of way for new road projects. Much of that right of way is used to accommodate poles, lines and other utility infrastructure.

Eyeing power plants

Utility companies that pay the franchise fee in Lawrence include Westar, AT&T, Kaw Valley Electric Cooperative and Sunflower Broadband and Worldnet LLC – which are both owned by The World Company, which also owns the Journal-World.

Aquila, the city’s natural gas provider, also pays the fee, but its rate would not be increased because it already is being charged the maximum 5 percent.

Patrick Knorr, general manager for Sunflower Broadband, said 5 percent franchise fees were becoming more common in the industry. He said if the city imposes the new fees all at once, it could become burdensome for consumers.

“They might want to assess whether they want to do this all at once or phase it in,” Knorr said. “It all does add up.”

Electricity consumers in the city could see an additional fee increase. That’s because the city also is contemplating annexing Westar’s Lawrence Energy Center, a coal-burning power plant just north of the city limits.

That would mean the power plant would begin paying taxes to the city instead of to Wakarusa Township. The property tax rate for Lawrence is 66 percent higher than in Wakarusa Township. Exact totals weren’t immediately available, but that would amount to hundreds of thousands of dollars more in taxes that Westar would pay on the plant each year, said Karla Olsen, a Westar spokeswoman.

Olsen said the utility has the ability to pass the extra property taxes along to consumers. But Olsen said the company would have to determine how much of its customer base the tax increase would affect because the plant provides electricity to more than just Lawrence.

The annexation also would represent the loss of the largest single taxpayer in Wakarusa Township. Norman Leary, treasurer for the township board, said it was concerning.

“I don’t know what we can do to fight it,” Leary said. “We would just have to tell the city that they are sure going to mess our budget up.”

City commissioners on Thursday said that if they did pursue the annexation, they might be able to phase the tax increase in and provide a transition period for Wakarusa Township.

Commissioners also expressed interest in annexing the ILC plant, formerly the Astaris plant, in North Lawrence. That would affect the Grant Township tax base.

Other increases

Commissioners discussed other possible fee increases. Commissioners said they might want to examine the current levels of impact fees charged to properties hooking onto the city’s sewer and water systems.

They said increases also might be needed in the fees the city charges for site plans, rezonings and other planning processes. A recent survey of area communities found Lawrence fees for those processes were among the lowest.

City commissioners are taking a hard look at fees in an attempt to bring new money into the city budget to offset additional expected expenses in street maintenance and other infrastructure.

“Anytime that we get into the situation of having tight budget years, we’re going to look at any revenue source that we have,” Mayor Mike Amyx said. “One of the things we talked about today is to make sure that we don’t place any more burden on property tax than we absolutely have to.”

But commissioners stopped short of saying that they wouldn’t also raise the property tax mill levy. Commissioner Sue Hack said that was still an option in her mind.

“I can tell you that this is the toughest budget process that I’ve been through,” Hack said.