AUSTIN (Nexstar) — Nearly 60 cities have taken the State of Texas to court over telecom laws city leaders claim could cost them millions.
The cities, including Austin, Dallas, Houston and San Antonio, asked an Austin district court judge on Wednesday to temporarily pause a Texas law that cuts fees for telecommunication and cable companies. The City of McAllen is leading the suit.
Companies providing both telephone and video service had to pay two separate fees for use of right-of-ways in cities across the state. Those right-of-ways include street signs, street lights, and some utility poles. Under Senate Bill 1152, the companies now calculate which of the fees would be higher, the pay the higher value.
“These companies are essentially being double-taxed to provide the services to the people in the cities that want to use their services and ultimately it ends up costing the consumer more,” State Sen. Kelly Hancock, the author of the bill, said in a meeting of the Senate’s Business and Commerce committee in March, before the bill was passed.
The cities argue eliminating the extra fee means communities could lose out on millions of dollars they rely on.
“Who is benefiting from this?” McAllen Mayor Jim Darling asked rhetorically after the hearing. “The state’s big argument is how the consumer is paying for it and not the company, but the consumer pays for everything that the company has.”
Texas Attorney General Ken Paxton is leading the state’s defense. His office did not respond for multiple requests for comment on the case on Wednesday.
Assistant Attorney General Drew Harris, representing the state, argued the right-of-way is owned and governed by the state, and therefore the state should decide the payment mechanism, not cities.
“It’s a matter of state power,” Harris said, arguing that lawmakers decided on how to compensate for usage of the space.
Leaders from cities across the state said allowing the new law to stand would force communities to make budgetary sacrifices in the millions of dollars.
“We would like to get it resolved so we can make the final adjustments that we need to make,” Darling said.
McAllen would lose $300,000, city leaders said. Court documents indicated Dallas would face a loss of $6-10 million.
Don Knight, Dallas’ senior assistant city attorney and chairman of the Texas Coalition of Cities for Utility Issues, testified SB 1152 would “greatly reduce” the revenue the city would have received for use of the public right-of-way.
“The losses will increase,” Knight estimated.
Darling said the legislation at the center of the suit is an example of the state’s attitude toward cities.
“We are partners in a lot of issues and I would like the legislature to look at us as partners rather than adversaries,” Darling explained.
This court appearance is the latest in a string of legal proceedings that started after state lawmakers approved a 2017 measure that stripped much of cities’ power to regulate the installation of cell service, wireless internet, and video services. A similar effort by the plaintiffs to temporarily halt the 2017 law, Senate Bill 1004, failed.
After hearing arguments, Judge Lora Livingston said she did not expect to render a decision whether to temporarily block the legislation for at least a couple of weeks.