Item C: Telecommunications Tax Fund

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Work Session: Telecommunications Tax Fund Meeting Date: December 12, 2005 Agenda Item Number: C Department: Central Services Staff Contact: Jim Carlson www.eugene-or.gov Contact Telephone Number: 682-5524 ISSUE STATEMENT The council requested a work session about the Telecommunication Tax Fund, established in 1997 during the process of approving two comprehensive ordinances (20078 and 20083) following the passage of the Federal Telecommunication Act of 1996 (the act). Ordinance 20078 established cellular tower zoning and siting criteria. This work session addresses the 2% tax provision in Ordinance 20083. BACKGROUND An historical perspective of Ordinance 20083(1997) and its provisions relating to public rights-of-way management, compensation, and telecommunications and cable taxation is presented in Attachment A. Another historical item, the National League of Cities guide entitled The Telecommunications Act of 1996: What It Means to Local Governments, has been placed in the Council Office. Additional copies are available for review by contacting Pam Berrian. Eugene’s telecommunications tax program became effective in July 1997, following council action pursuant to a year of public meetings and a subsequent recommendation from an ad hoc council committee that included three councilors and the chair persons of both the Planning Commission and Budget Committee. The 2% telecommunications business privilege tax is on all telecommunications and cable carriers operating with a defined facility offering defined services in the Eugene city limits. Such carriers may own or lease their facilities. Their facilities may be wireline or wireless and may be in the public rights- of-way or not (rights-of-way users pay a separate fee that is not related to this tax). In Ordinance 20083, the tax is called an ‘annual registration fee” but is a lawful tax under Oregon’s constitution. The revenue base upon which the tax is applied is “gross revenues earned in the city limits of Eugene,” and may be further defined by applicable state or federal laws and rules. The telecommunications carrier tax was established as a special revenue fund to support a 1.5 FTE program administration and “new City telecommunications related projects of community benefit,” following a recommendation by the council committee. An ordinance review was envisioned by the council committee after an appropriate implementation period in a stable programmatic and financial environment. However, stable implementation did not occur as anticipated. In fact, after six years of Eugene litigation, related state and federal pre-emption attempts, major federal (e.g., FCC) regulatory