“Fees” on Utilities

“Fees” on Utilities

February 01, 2004

"Fees" on utilities imposed by local governments are struck down by state courts if they are in reality taxes on utility services.

Billings, Montana tried to collect a “fee” from utilities for using public rights of way. However, the fee was 4% of gross receipts from sales of utility services. Thus, the amount had nothing to do with the use a utility made of public rights of way. The Montana supreme court held in December that this was an illegal tax rather than a “fee.” It cited a similar decision by the supreme court in Florida striking down a 3% tax on utility gross revenue that a Florida county had claimed was an “electric utility privilege fee.” Taxes must be authorized by state legislatures. The Montana case is Montana-Dakota Utilities Co. v. Billings.

Keith Martin