An old argument over franchise fees may be renewed this year as local governments grapple for revenue in another lean year.

At a recent meeting between Hall County officials and local state legislators, commissioners asked for help changing the system that they say unfairly benefits city governments.

Franchise fees are a charge collected by utility companies and distributed to cities. Residents who live in unincorporated county areas still pay the fees, but the money goes to the nearest city rather than to county governments.

Commissioners feel the money county residents already are paying should benefit the county government.

The argument is one that has been brought before the Georgia General Assembly many times, said Amy Henderson, a spokeswoman for the Georgia Municipal Association.

“Franchise fees have been an issue between cities and counties for a number of years,” Henderson said. “Especially in recent years, because cities have a source of revenue that counties don’t, and right now everyone is looking at what sources of revenue are available.”

She said, it is up to the General Assembly to change the system.

“It’s never been approved by the legislature, and that’s what would have to happen,” she said.

Counties are only authorized by state law to collect franchise fees from cable providers. They cannot collect fees from any other utility company.

Clint Mueller, legislative director for the Association County Commissioners of Georgia, said despite a number of attempts, Georgia’s legislature has never been able to change the way franchise fees are collected and distributed.

“There have been some bills introduced into the General Assembly, but it’s never passed,” Mueller said.

A change has proved difficult because of the political nature of the situation.

Cities do not want to let go of the cash flow, while utility companies do not want to increase the amount they pay to local governments.

“We’re getting caught between the utilities and the Georgia Municipal Association,” Mueller said. “One side or the other will oppose it.”

Henderson said the GMA is not against counties getting franchise fees as long as it does not take away from revenue cities collect.

Franchise fees have roots in the early days of electricity when utility companies started paying cities for the ability to run power lines on public land.

“The power companies are renting the public rights of way,” Henderson said. “They’re paying for the use of that public property.”

At first, electricity was only available in urban areas. Power companies rented the land to establish power lines within cities but purchased land to extend power to homes outside city limits.

“Out in the county, they could run the lines out from those urban areas as long as they had enough customers along the way,” Henderson said.

Companies would also offer cities the franchise fee in hopes of becoming the exclusive provider of the service.

“There just wasn’t enough density in the unincorporated areas back then to attract utilities. They didn’t want to come serve the unincorporated area because there just wasn’t money to be made there,” Mueller said. “Counties never did push the franchise fee issue because they just wanted the utilities to provide service in those areas. They didn’t want to have any kind of disincentive for them to provide the service. They were trying to attract them into those areas.”
Mueller said he thinks the system is out of touch with how Georgia is today.

“Today, it can be just as urban looking in the unincorporated areas as it is in the cities. The majority of people in metro Atlanta live in unincorporated counties,” Mueller said.