Item C: Telecommunications Tax Fund

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CURRENT RIGHT OF WAY ISSUES FOR LOCAL GOVERNMENTS A 2005 Update of Regulatory, Judicial and Legislative Issues Pamela J. Beery, Esq. Beery, Elsner & Hammond, LLP Portland, Oregon I. INTRODUCTION Municipalities across the U.S. that are authorized to manage the public ROW and establish related fee or tax programs operate under continued threats of pre-emption. The high-stakes economic and political environment continues to produce a variety of state and federal pre- emptive bills, FCC declaratory rulings, an array of court decisions, and referenda challenging local government-initiated telecom taxes and fees. This activity occurs in an environment of converging technologies where voice and video services are now offered on a variety of platforms. Some of the current threats are described below. Converging technologies and related FCC decisions are excluding Internet based voice services from traditional telecommunications treatment. In late 2004, municipalities fought hard to retain their authority after new language was inserted into S150, a federal internet sales tax moratorium bill. The new language threatened local government authority by prohibiting fees and taxes on telecommunications carriers that happened to use their systems for Internet applications as well as traditional telephone services. Local governments prevailed and continue to be permitted to charge fees and taxes on facility- based ROW users – at least for now. Recently, the U.S. Supreme Court ruled cable modem Internet services to be outside the scope of regulation by local governments, meaning fees cannot be charged even if the system uses the ROW. Cable modem is not telecommunications and is not cable; instead, it is a category of Information Services that is largely unregulated. Billions of dollars of potential tax and fee revenue for local governments across the United States is unable to be captured. Despite studies that indicate Oregon is ranked the 4th lowest in the United States for telecommunications related taxation, Oregon cities face continued pre-emptive threats: Cities and counties prevailed in the 2005 legislative session in the face of attempts o to force expensive local government elections any time any locally elected body sought to change (reduce, amend, increase) any fee or tax on a telecommunications carrier. Another bill proposed a single statewide plan for telecommunications ROW use and taxation, centralized State collection of fees, and mandatory retail end user (i.e., customer) payment of any fees and taxes.