January 24, 2006

Meals tax not going to AFN

Money from wastewater fund isnšt from surchargeBy Vickie Aldous

Ashland Daily Tidings

The City of Ashland will not be diverting money from the city meals tax to help cover the Ashland Fiber Network’s debt payments, according to Ashland Finance Director Lee Tuneberg.

On Tuesday night, the Ashland City Council voted to transfer $540,000 in excess reserves from the city’s wastewater fund and $460,000 from the electric fund into a contingency fund to cover AFN shortfalls.

Voters approved the meals tax in 1993 after intense community debate. Restaurant patrons pay a 5 percent tax on their meals, with 4 percent going to fund sewage treatment plant upgrades and 1 percent earmarked for park land purchases.

Resident John Gaffey, who has launched an initiative to ask voters whether the city should sell AFN, and at least one restaurateur had questioned whether meals tax money would be diverted out of the wastewater fund to AFN.

But Tuneberg said all the money that comes in from the meals tax is spent to help make payments on the sewage plant upgrade loan.

The meals tax generates about $1.4 million each year toward the $1.8 million annual sewage-upgrade debt. The rest is made up by user fees and system development charges on development, he said. Additionally, the meals tax revenue is restricted money. Restricted money is used first, before unrestricted funds that can be applied to different needs, according to Tuneberg.

AFN, which is $15.5 million in debt, owes more than $1.2 million in interest-only payments during this fiscal year, which ends June 30, according to finance department figures.

The city council approved transferring $500,000 from the electric fund in December 2005 to AFN to help cover the debt. AFN had a $432,000 debt payment due on Jan. 15, according to finance department figures.

The $1 million from the electric fund and wastewater fund approved Tuesday night will be placed in a contingency fund to be used when needed, Tuneberg said.

Meanwhile, AFN cable television rates — which have long been set at below-market rates — are set to go up in February to improve AFN’s finances.

The price of the popular Expanded Basic Cable television package will rise from $34.83 to $41.95, according to city utility billing staff. The city has sent out notices about the coming increase, billing staff said.

Since AFN’s roll-out began in the late 1990s, AFN and Charter Communications cable television customers in Ashland have saved roughly $5 million due to low rates. A single cable customer, on average, has saved almost $800 during that time, according to Tidings calculations.

Staff writer Vickie Aldous can be reached at 479-8199 or vlaldous@yahoo.com.