Anytime the issue of taxes comes up at the city most of commentary centers on the notion that it is the residential property owner that overwhelmingly pays the majority of the taxes in the community. Yesterday was no exception as city council explored the various fees to make up the city’s budget shortfalls. Generally, politicians take the opportunity during budget discussions to pontificate about how they are looking for ways to hold the line on taxes. Cortney Niland is no different. So I thought I would let her explain to you her position on applying fees, that many of us argue are nothing more than taxes, in her own words.
As you know, I take the various public sources of information available to me and add them to my database of El Paso political shenanigans.
You are also aware that Niland proposed an increased franchise fee for your water bill that could generate up to $3.5 million by adding about $2 to the monthly bill.
The city manager had proposed increasing the franchise fee for the El Paso Electric Company.
Let’s take a quick look at the history of the electric utility franchise fee. In 2005, the city raised the electric utility’s franchise fee from 2 percent to 3.25 percent in 2005. This generated $15.5 million for the city, an increase of $7.2 million annually. At the time, everyone agreed this was a hidden tax. In 2010, the electric utility’s franchise fee was increased to 4 percent. As a result, El Paso residents paid about $4 million more into the city’s coffers.
Now, let’s fast forward to this year’s budget discussions. Increasing El Paso Electric’s franchise fee from 4 percent to 5 percent was estimated to generate an additional $4.8 million for the city from the current $19 million.  Cortney Niland, instead, proposed that the city consider a monthly franchise fee for the water utility instead of increasing the electric company franchise fee. 
Let us delve a little deeper into the electric company’s franchise fees.
As part of the 2010 rate settlement with El Paso Electric, city council rejected the idea of applying the additional $3.7 million, from the franchise fees, to economic development. Instead, city council gave 75 percent of the additional revenues to the Medical Center of the Americas Foundation towards developing a research park at UMC.  Remember, the medical foundation is tied directly to Ray Caballero’s public policy agenda that has been supported by those political candidates that have been partly funded by Woody Hunt and Paul Foster.
Cortney Niland, for her part, focused on the rates charged by the electric company immediately upon taking office. El Paso’s local daily Vic Kolenc writes “El Paso city Rep. Cortney Niland says El Paso Electric’s rates and profits are too high.”  This was in 2011.
In response to a question posed by Marty Schladen of the El Paso Times who asked Niland if she believed that El Paso Electric’s rates were “unreasonably high”, Niland responded “I know their rates are the highest in the state of Texas, and I happen to know that financially, they’re one of the best performing utilities in the nation. In the last 10 years, we’ve lost 23 percent of our large industrial businesses. And a lot of that has to do with the fact that our electric rates are the highest in the state of Texas”. 
In 2011, Cortney Niland told the El Paso, Inc. “Right now, my primary focus is studying the budget and trying to make sure that we can live within our means, not raising taxes, cut spending, and look for alternative methods of income that we maybe haven’t explored in the past”. 
In 2012, the city forced the electric company to go before the Texas Public Utility Commission to challenge the electric company’s propose rate increase. The electric utility eventually settled with the city by decreasing the rates by $15 million in April of 2012.
The El Paso Electric has remained neutral to the city’s proposed franchise fee, according to the local paper. The newspaper quoted a spokesperson for the utility is stating that if the city approved the rate increase “it would be reflected on customers’ bills”.  In essence, a rate increase for commercial and residential electricity consumers. Everyone agrees that any franchise fee is passed on directly to the taxpayers of the community.
Niland is quoted as stating that the “power company’s rate is already among the highest in the state”, adding that the proposed rate increase “would only apply to residents within the city limits”.  Cindy Ramirez quotes Niland as stating that the “proposed increase could be a big hit for industrial and commercial users”.  Instead, Niland argues that the water fee is a fairer fee for everyone. “A franchise fee for the water company, which the city owns, could be implemented countywide and capture more users”, Ramirez attributed to Niland. 
In other words, Cortney Niland is arguing on reducing costs for the commercial users by increasing fees imposed on the taxpayers of the community.
“I think one of the reasons I considered the water utility was because if you were to put a fee on the bill, it would be something not just city-wide but county-wide”, Niland was quoted by the local daily. Niland added to her quote, “It would also be something that would not only effect just homeowners but all users of this infrastructure. So to me it spreads the cost among all users”. 
“We also knew that separate portions of the budget that needed to be funded whether we went down the El Paso Electric route or whether that meant we went down the water utility route. We looked at several different options, because we didn’t want to put the entire burden on just the home owner”, Niland added. 
The problem, though, is that rather than cut city costs Niland, along with other city council representatives decided that instead of imposing a tax increase, they instead raised fees for the city’s taxpayers.
However, Niland states it the best in the following quote attributed to her by Aileen Flores. In discussing the proposed franchise fee increase for El Paso Electric, Niland is quoted as stating “My concern is that if you don’t have a job, you can’t pay that $8, so I what I don’t want to do is force businesses to cut back and lose jobs over this because the $8 are going to seem rather insignificant if you don’t have a job at all”. 
Notice how Niland is quoted as being worried about someone without a job having to worry about paying an $8 fee while at the same time worried about businesses firing individuals because of a fee increase. Now tie all of this together with the following facts.
Western Refinery, whose revenues directly benefits Paul Foster, placed itself on the city council’s agenda opposing a franchise fee increase being placed upon the electric utility. As a large electric power consumer, Western Refinery would be directly affected by increased fees passed on to consumers by the electric company. You might also remember that Paul Foster was involved in a group that significantly funded Niland’s political campaigns.
Now tie all of these quotes and actions by Cortney Niland together. Does a pattern stand out for you?
Yesterday, city council passed the motion to adopt the city budget on a six to two vote. Carl Robinson and Lily Limon voted against the budget. The final water fee ended up being applied to non-residential users at $16.10 per month. Fees for the zoo and other city amenities were also increased. What wasn’t increased and quickly disposed of was the fee that Paul Foster’s company was complaining about – the additional electric franchise fee.
1. “El Paso City Council struggles to find revenue stream to deal with 2015 budget shortfall”; Martinez, Aaron; El Paso Times; August 13, 2014
2. “Times Q&A: El Paso Electric CEO responds to rate, profit concerns”; Kolenc, Vic; El Paso Times; August 15, 2011
3. “Times Q&A: El Paso City Council Rep. Cortney Niland investigates electric rates”; Schladen, Marty; El Paso Times; August 8, 2011
4. “El Paso City Council considers raising electric, water and trash fees under proposed budget”; Ramirez, Cindy; El Paso Times; July 29, 2014
5. “Western Refining opposes City of El Paso’s proposed electric franchise fee increase”; Flores, Aileen; El Paso Times; August 16, 2014
6. “Q&A with New District 8 City Rep”; Crowder, David; El Paso Inc.; July 14, 2011
7. “$98 Million in EPE Franchise Fees: Who Really Pays it and Where it Really Goes”; Crowder, David; El Paso Inc.; August 23, 2011