Water rates could rise for Selma subscribers
Published 12:00 am Friday, October 31, 2003
Water rates could be on the rise for customers of the Selma Water Works and Sewer Board.
According to Billy Hicks, chairman of the water board, an ordinance passed at the Selma City Council’s Monday meeting may lead the board to a rate increase.
Hicks said he didn’t yet know how much of an increase might be on the way.
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City Attorney Jimmy Nunn, however, said a public outcry could occur if water rates increased. &uot;I’ve never heard of a business passing the business license on to the customer,&uot; Nunn said.
The ordinance, which passed 6&045;3, requires the water board to pay the city a 3 percent license tax, a fee that hadn’t been in effect previously. According to Nunn, similar ordinances are already in effect for companies providing utilities, such as Alabama Power and Alagasco.
The ordinance is expected to bring the city an additional $100,000 to $120,000 in revenues.
When asked why a license tax didn’t already exist for the water board, Nunn said he wasn’t certain, but pointed out that the water board was part of the city until 1968. The board is now a separate entity, as is the Enhanced 911 board of directors.
Gary Thompson, an attorney for the water board, said that while the City of Selma may have the legal right to pass a license fee, he didn’t think the one adopted Monday night met the standards of law.
Thompson has previously questioned the city’s ability to enact the fee. In a memorandum to Councilman Glenn Sexton dated Oct. 16, Thompson stated the tax is a franchise tax. Citing a June 30, 1987, contract between the board and the city, Thompson stated that since no franchise fee was imposed at that point, one could not be imposed until the contract expired in 2017.
Nunn disagrees. &uot;You can’t say that it’s a disguise,&uot; he said. &uot;They’re two separate things.&uot;
According to Nunn, a franchise fee is paid by businesses using streets, avenues and alleys for operations of a public utility or of private enterprise. A business, or license, tax is a fee all businesses must pay to conduct business in the city or its police jurisdiction.
Nunn agreed that the city couldn’t charge a franchise fee since one wasn’t imposed in the 1987 contract, but added that a business license is something completely different. Nunn also denied that the tax would be retroactive.
He explained that in order to determine how much money is owed for 2003, the water board’s gross income for 2002 must be determined and 3 percent of that amount calculated. He said the license tax was a flat fee determined by gross income from the previous year, not the amount of time the board performed a service.
Nunn added that if the ordinance had been passed in 2004, collecting a license fee for 2003 would be retroactive. However, since it was passed in 2003, the license fee could still be collected for this year.
The ordinance goes into effect upon its publication, which is expected this Sunday.