Item C: Telecommunications Tax Fund

Home Browse Search

rulings, a variety of court decisions, and more recent congressional proposals to re-write the act, staff do not perceive that a stable environment has occurred. As a matter of federal law, carriers are permitted, but not required, to itemize on the bill and pass on a variety of the expense of doing business, including fees or taxes charged by federal, state, or local entities, directly to the end user. As a note, Ordinance 20083 added a new category of telecommunications user of the public rights-of- way, consistent with federal law, and use fees began to be levied on ‘resellers,’ a term used for users who pay compensation to facility owners for use of telecommunications or cable lines in Eugene’s public way. Such use fees have historically been allocated to the General Fund. The fees from the reseller category have resulted in the General Fund receipt of an additional $1.5 million annually. Current Fund Financial Information : By 2004, after six years of litigation, Eugene prevailed at the Oregon Supreme Court level, the ordinance was validated back to its 1997 effective date, and the City received arrears payments of fees and taxes for the General Fund and Telecommunications Tax Fund. Some tax revenue was used to repay the General Fund for financial support provided the program during litigation, to the Risk Fund for the legal costs involved in the litigation, and to the first round of projects. In addition, some of the arrears tax was used to pay for one-time projects, in accordance with City policies regarding non-recurring revenues. Attachment B illustrates this in an overview of Fund 135. In FY05, $5.2 million was transferred from the General Fund ROW fees and $10.2 million was transferred from the Telecommunications Tax Fund into the Facility Replacement Reserve to be used for development of future City office buildings in the downtown area. During the FY06 budget process, the Budget Committee recommended and the council approved a $378,000 one-time allocation from the Telecommunications Tax reserve for public safety patrols in parks. In FY06, staff recommended that a Telecommunications Tax Fund equipment replacement reserve of $1 million be established. Equipment purchased with tax funds (such as mobile data terminals, video cameras, and servers, routers, and other telecommunications hardware) has a technological shelf life that necessitates replacement in several years. The uncommitted reserve is almost $2 million. There are not enough years of data to determine the ongoing trend in revenue from the Telecommunications Tax, as the last legal Eugene challenge was decided in FY04 and quarterly taxes didn’t become regular until early FY05. However, in FY05, approximately $2.5 million in Telecommunications Tax revenue was received which included back payments and interest from FY05 registered carriers who had been found to have operated in Eugene prior to FY05, and various provider bankruptcy settlements. InFY06, $2.2 million in tax revenue is projected. The actual amount of revenue received can be affected by the various threats to the program that are described later in this Agenda Item Summary. On- going fund expenditures include the cost of the 1.5 FTE staff to administer the program, attorney fees related to continued legislative and legal threats, funding of new City telecommunications projects, and replacement of a portion of the equipment originally purchased with telecommunications funds. Project Information: The projects funded by the Telecommunications Tax are selected through a multi-step, competitive administrative process which begins at the department level and results in