NEGAUNEE - The city of Negaunee is once again wrestling with trying to keep its cable system afloat.
"It seems like this cable system is cursed," Councilwoman Diana Menhennick said at last week's Negaunee City Council meeting. "We take one step forward, and something happens and we take 20 steps backward, and it seems like we're stuck in this hole and we can't get out of it."
The city of Negaunee has operated its own cable TV system since 1985, but with the system losing money the city was required last year to file a three-year deficit elimination plan for its cable fund to the Michigan Department of Treasury.
The city of Negaunee’s cable and Internet equipment is shown. The Negaunee City Council discussed the future of the cable system last Thursday at its regular meeting. To help make the cable system more sustainable the council voted in August to raise rates by $5 and to drop the Big Ten Network. (Negaunee city photo)
The department rejected the city's plan and requested a five-year budget projection showing the elimination of the fund deficit, according to an Oct. 4 letter sent by Negaunee City Manager Jeff Thornton to the mayor and the city council.
In the letter, Thornton recommended making a transfer from the general fund to cover the $19,472 deficit, which, because the Department of Treasury rejected its plan, the city must do to comply with state law.
The council voted at Thursday's meeting to transfer the funds, but council members agreed that for the city to continue to provide cable services to Negaunee residents, something was going to have to change.
The city originally made a $5 monthly increase to cable customers. Thornton said this would have addressed the deficit, but that lost revenues from a combination of customers lost due to the increase and "very, very aggressive advertising" from Charter Communications - a Missouri-based cable TV, high-speed Internet and telephone services company - it's nearly impossible to predict the future of the fund.
"My projected revenues - which, in the budget ... you project your revenues and you project your expenditures - well, what we had thought about our revenues, now those do not hold true," Thornton said.
Thornton said that since the monthly increase, the city has lost about 30 customers - but it has also added several first-time customers. He said he suspects these new customers are former Charter customers who have left Charter temporarily - for 30 days, he said - so that they will then qualify for Charter's promotional deal.
"There's a suspicion that we are getting cable customers for basically one month, because we are so liberal with our cable - these are local residents, we take care of our residents, we don't have the stringent things that other places have," he said. "Our installers are feeling that, because basically they're being directed, 'Don't touch the old system.' "
The city doesn't require customers to sign a contract, though it does charge $18 to connect or reconnect the service.
Thornton said that if the council wants him to, he can go ahead with the five-year plan requested by the Department of Treasury by making his best estimate, but that he doesn't want to be blamed if his projections are inaccurate.
Mayor Richard Wills said that the city originally adopted the cable system because residents were getting "hammered" by a monopolistic cable company, and he warned that Charter's current promotion may be directed at getting rid of competition from the city.
"People need to be aware, once Negaunee cable goes away, they won't keep their deal (with Charter)," he said.
Councilman Michael Van Stratten said he voted for the $5 increase because he didn't want to see the system be discontinued, but said the cable fund's financial situation is not a positive one.
"I cannot continue to support the cable system in its current form," he said.
"What we're facing right now, the problem or the dilemma, people of Negaunee have to decide if in this period of time ... if they want the system to remain in effect," Councilman Michael Haines said.
He said that people are going to have to "vote with their wallets," and argued that in the long run if unpackaged the city still offers the most reasonable prices.
"If this year it ends in a deficit, I think the voters have spoken," he said.
Councilman Keith LaCosse said the bottom line is that the cable fund is in deficit every year, and he predicted it will continue to be in deficit.
"Cable is not a government function," he said. "And I will leave it at that."
Menhennick said that despite the cable system losing money, she believes it to have an intangible public value.
"I have a hard time basing this cable system only on dollar value," she said. "I guess this council has a very huge task in front of it. ... We have some work ahead of us."
Zach Jay can be reached at 906-486-4401.