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City may slap gross-receipts tax on utility

The city is poised to impose a gross-receipts tax on New York State Electric & Gas Corp. as its price for allowing the utility to renew its century-old franchise to operate here.

Last week, the Common Council scheduled a public hearing for Oct. 19 on a law giving itself the power to impose a tax of as much as 2.5 percent on the gross revenues NYSEG generates on its electric and natural gas sales within the city limits.

The levy would be in addition to a 1 percent tax the city has long charged on utility bills. Richard P. Mullaney, city clerk and budget director, said the city estimates that tax will bring in $400,000 this year.

Corporation Counsel John J. Ottaviano said no one has determined how much the new franchise tax might bring in.

He said the law was suggested by Paul V. Nolan, the Virginia attorney who advises the city on utility matters.

North Tonawanda, which has a similar law, collects about $1.1 million a year from its 1 percent taxes on electric, gas and telephone bills, according to City Treasurer Leslie J. Stolzenfels. It also pockets an estimated $280,000 a year from a 5 percent franchise tax on Adelphia for allowing the company to offer cable television service in the city.

"We're only talking about NYSEG," said Mayor Michael W. Tucker.

"Any franchise fee we let cable keep. They've invested it in LCTV," Mullaney said, referring to Lockport Community Television, Lockport's public-access system, which takes up three channels on local cable.

NYSEG's 100-year franchise to operate in Lockport expires Oct. 23. Lockport Light, Heat and Power Co. signed the deal in 1905; it was one of many smaller companies around the state that eventually were absorbed by NYSEG.

Ottaviano said even if the law passes, it doesn't necessarily mean the city will impose the gross-receipts tax on NYSEG. He hinted the city wouldn't mind if NYSEG would offer to pay some sort of flat franchise fee in the new agreement.

"All we're telling them is, they should be paying something," Ottaviano said.

NYSEG's local and statewide spokesmen did not return calls seeking comment on the tax Thursday or Friday.

e-mail: tprohaska@buffnews.com

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