Texas Attorney General Opinion: JM-16 Page: 1 of 3
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The Attorney General of Texas
Supreme Court Building
P. 0. Box 12548
Austin, TX. 78711- 2548
March 18, 1983
Honorable Warren New
Yoakum County Attorney
P. 0. Box 359
Plains, Texps 79355
Opinion No. JM-16
Re: Whether charge imposed on
telephone company by city may
be passed on to county as a
customer of telephone company
1607 Main St., Suite 1400
Dallas, TX. 75201-4709
4824 Alberta Ave., Suite 160
El Paso, TX. 79905-2793
1220 Dallas Ave., Suite 202"
Houston, TX. 77002-6986
806 Broadway, Suite 312
Lubbock, TX. 79401-3479
4309 N. Tenth, Suite B
McAllen, TX. 78501-1685
200 Main Plaza, Suite 400
San Antonio, TX. 78205-2797
An Equal Opportunity/
Affirmative Action Employer
Dear Mr. New:
You have been notified by the telephone utility which serves your
county that it is imposing an extra charge on the bills of its
customers receiving service within the city limits of Plains. The
extra charge was initially denominated a "city gross receipts tax,"
but was subsequently referred to in later correspondence as a
"franchise fee." This "franchise fee" is equivalent to a charge that
the city imposed upon the telephone utility and which the telephone
utility seeks to pass through to its customers. You have refused to
pay the extra charge and have asked whether such pass-through charge
can permissibly be imposed upon the county. You claim that the charge
is, in reality, a tax and cannot be levied against the county lest
article XI, section 9 of the Texas Constitution, which exempts from
taxation the property of counties devoted exclusively to the use and
benefit of the public, be violated. We reject your contention and
conclude: that the telephone utility is not prohibited from passing
through to the county the extra fee imposed by the city.
This office addressed a similar issue in an earlier opinion and
concluded- that state agencies may pay a so-called "municipal franchise
charge" imposed by the telephone company upon all of its customers,
including state agencies. As noted in Attorney General Opinion H-1265
(1978), utility companies frequently enter into franchise agreements
with cities authorizing them to use the city's streets in exchange for
a franchise fee, which is-usually calculated as a percentage of the
gross receipts received on services locally rendered. The Public
Utility Commission requires regulated utilities to file with the
commission tariffs which provide that any municipal franchise charge
will be passed on to the utility customers within the affected
Article 1175, section 12, V.T.C.S., requires telephone companies,
before using the grounds or streets of a home rule city, to first
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Texas. Attorney-General's Office. Texas Attorney General Opinion: JM-16, text, 1983; (texashistory.unt.edu/ark:/67531/metapth272456/m1/1/: accessed February 19, 2019), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; crediting UNT Libraries Government Documents Department.