The citizens of Plano may not be the only Texans paying more for video streaming services in the near future.
Back in July, the city of Plano requested state Attorney General Ken Paxton’s approval for a proposed contingency-fee contract with outside law firms Ashcroft Sutton Reyes, McKool Smith, and Korein Tillery.
The city wants the three firms to represent it in a suit against Netflix, Hulu, Disney, and other video service providers (VSPs) for their failure to pay the municipality five percent of their gross revenues, as allegedly required by the Texas Public Utility Regulatory Act. The act has long been enforced against cable companies but has never been applied to streamers.
Prior to the passage of House Bill 2826, Texas law required local governments to secure approval from the state comptroller for contingency-fee contracts. Approval for such contracts must now be obtained from the state attorney general.
“The City’s Attorney’s office is engaged in overseeing, managing, and litigating hundreds of matters,” asserts the request for approval submitted by Plano to justify the need for outside attorneys. “Thus, the City does not have the resources it believes will be necessary to engage in protracted, time-consuming, and expensive litigation.”
Municipal revenues have declined nationwide as cable customers switch to VSPs, whence the eagerness of city officials to apply the fee to streaming services.
Waco also submitted a proposed contingency-fee contact to AG Paxton in July. In August, Abilene, Carrollton, Frisco, and Garland followed suit. The Dallas City Council voted to pursue this same revenue-enhancing course early in the year.
Most, if not all, of the cities requesting Paxton’s approval for their proposed suits are represented by the same three law firms: Ashcroft Sutton Reyes, McKool Smith, and Korein Tillery. If they succeed in their quest for easy added revenue, they’ll be applying yet another hidden tax to their own citizens.
That’s because the streamers will just do what the cable companies have done from the beginning: pass the cost on to their customers.