The powerhouse Lakeland group, known as the Lakeland Economic Development Council, released its recommendations for the city last week. The president of the LEDC, Steve Scruggs, discussed possible solutions that the group had for Lakeland. One of the most significant proposals was a 2% tax increase on all hospitality-related activities in the Lakeland area. That includes all prepared food and beverages in the Lakeland city limits.

Key Points

Lakeland is facing a budget shortfall in the future caused by the loss of the Lakeland Regional Medical Center lease

The LEDC has come up with some solutions, including selling the Cleveland Heights Golf course and instituting a 2% tax on all prepared food and beverages

An alternative solution may be to invest in Fiber to deliver cheaper internet to Lakelanders, bringing us sorely needed Internet options and providing another revenue source for the city

Why Will Lakeland Face a Budget Shortfall?

The budget gap will arise because of the looming loss of the lease payment that the hospital pays the city. Some citizens are upset about this, citing fiscal malfeasance by the Lakeland commission. But there is a logical reason why Lakeland commissioners were forced to make that decision.

The Lakeland Regional Medical Center (LRMC) is a hospital known as a Safety Net Hospital, which means that it is required to accept all patients- regardless of their ability to pay. In return for that designation, the state allows the hospital to have an uncontested service area from which it draws patients. Having an uncontested service area enables the hospital to make up for the deficits of having to serve customers that can’t afford to pay.

That changed with a recently passed law by the State Legislature that eliminated that protection, allowing private hospitals to open up in the same market as the safety net hospitals. On its face, more competition would be a good thing for the consumer because it breeds better pricing and services. However, critics say that the problem is that private hospitals will not be required to take in patients that can’t pay and will cherry-pick the profitable patients. Lakeland Regional Hospital will now be forced to compete with these private hospitals at a disadvantage. They will be forced to treat patients that can’t pay while private hospitals will be to cherry pick the patients that can pay.

The Lakeland commissioners recognized this problem and decided that the LRMC’s lease payment to the city should be reduced so that it can continue to remain competitive against these new private hospitals.

What Are the LEDC Recommendations?

The LEDC had a televised presentation last week to discuss some ways to make up for the budget loss from the lease dissipating, and one of the cornerstones was a “hospitality tax” increase. This tax would be levied on restaurants, alcohol-related sales, and other related activities. There were a few other ideas the LEDC recommended too, like selling the Cleveland Heights Golf Course to make room for housing development.

Is There Another Way to Fix the Budget Shortfall?

The LEDC came up with some ideas that would close the gap, but I think there is a better way to fix the budget shortfall. Lakeland should invest in fiber infrastructure to bring internet service to its citizens. This idea would allow Lakeland to invest in a project that would invigorate our economy, lower our internet bills and make up for the revenue loss of the Lakeland Regional Hospital (LRMC).

Lakelanders Aren’t Happy With Their Current Provider

Lakeland’s Existing Fiber Network- The Redder the Color the Closer the Fiber Internet

It’s no secret that Lakeland has an internet connectivity problem. The majority of Lakeland agrees that they are being overcharged for their internet service. For those of us who are lucky to live in an area that does get reliable service, the speeds we get is often far less than what we’re being charged. The distaste for our current provider is no secret, surveys done by our group LakelandFiberNow and the city of Lakeland have indicated that the majority are looking for more options when it comes to their internet service. The good news is that we have hundreds of miles of fiber already installed in the ground. Some of that fiber is already being used to deliver internet services to groups in Lakeland. Why wouldn’t Lakeland leverage the existing infrastructure to fix Lakeland’s connectivity problem while addressing its budget?

Lakeland Electric and the Lakeland Regional Hospital have generated revenue of close to a billion dollars for the city since their inception. The money generated has allowed Lakeland to offer services that many other communities envy. For example, the parks Lakeland is known for, like the soccer fields that children play on and the Library that provides access to those who need information.

Budget Woes Aren’t The Only Reason Lakeland Needs A Better Internet

Suggested Pricing for Lakeland Internet- How does it compare with your current plan?

LakelandFiberNOW estimates that the average Lakelander would actually save money on their bills despite the extra cost of investment. In order for Lakeland to borrow the money to build the network, the average Lakelander would pay about 15 dollars a month in taxes. However, that cost would be offset by about 35% savings on their internet bill that they pay Spectrum or other ISP. And once the infrastructure has been paid off the taxes to build the fiber would sunset afterward (about 8 years). Even if the city decides it no longer wants to be a fiber provider, the infrastructure would be worth millions to private companies willing to use it for their own needs.

Of course, there are many other benefits that other communities have seen outside of the profits that LakelandFiberNOW has tried to focus on. But if Lakeland looks towards the other municipalities that have offered service, many of them are profit centers for the cities they serve. Chattanooga, TN alone generates 40 million dollars a year for the community while providing extremely competitive internet service to its customers.

The Commission is Currently Looking For a Private Partner- That Changes The Calculus

The above information about pricing and borrowing cost would not be accurate if the city decides to partner with a private company. Typically private companies want to offload the risk onto the taxpayer while reaping the rewards and profits for themselves. I don’t think that’s a fair trade. Looking at other communities who have already built their networks, the most successful Municipal Fiber initiatives have been where the infrastructure is owned by the community. If a private partner wants to distribute content over the fiber that’s fine, but the ownership of the fiber should rest in the community’s hands.

I’m still waiting to see information from the city of Lakeland about the results of a partnership, so stay tuned.

Tough Choices Ahead For Lakeland

So once again, Lakelanders are left waiting to hear about the plight of their internet service. Policymakers will also need to make a decision about how to proceed with the looming budget shortfall. I say let’s leverage our existing fiber to bring us better internet while saving us money. Other communities have already lit the way for us and they are seeing benefits in job growth and increased connectivity.

Lakeland Mayor Bill Mutz has stated many times that he wants Lakeland to be a smart city. I say we can become one by making smart decisions. Lakeland should build a fiber network that will serve its citizens, energize business and make a stronger community.

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