Item C: Telecommunications Tax Fund

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2. Plaintiffs contended that the city's telecommunications registration and licensing fees violate Oregon Revised Statutes (ORS) 307.215, which they read to prohibit any taxation of "amounts paid" for telephone service. According to the companies, a tax levied on their gross revenues is, at least indirectly, a tax on the amounts paid for telephone service.The City contended the statute does not apply, because the statute prohibits taxes on telephone service subscribers and does not prohibit taxes on telephone service providers. The court found that the statute does not appear to apply to taxation of telecommunications services provider revenues and that the context suggests strongly that the legislature did not intend to prohibit local governments from imposing a tax on telephone service provider revenues. 3. The plaintiffs contended that the entire ordinance is preempted by the state's exercise of comprehensive regulatory authority over the provision of telecommunications services, as provided in ORS chapter 759, which guides the Public Utilities Commission (PUC). The City countered that nothing in ORS chapter 759 suggests that the PUC has exclusive regulatory authority over the provision of telecommunications services in the state. The court decided that nothing in ORS chapter 759 expressly preempts local governments from imposing registration and/or license fees as that chapter contains none of the usual declarations of preemptive intent ("the state hereby preempts" or "no local government shall"). B.Federal Law Claims Plaintiffs contended that Congress expressly preempted the City's ordinance in two different ways: 1. That the 1996 Telecommunications Act’s 47 USC § 253 preempts all local government regulation of telecommunications service except nondiscriminatory charges for ROW use that do no more than cover costs incurred by local governments in providing the ROW. According to the companies, the City's registration and license fees are not so limited and therefore are preempted. The City argued that the Act prohibits only state or local laws that prohibit or have the effect of prohibiting the ability of telecommunications providers to provide telecommunications service and that Ordinance 20083 did not have the effect of prohibiting the provision of telecommunications service. The Act provides, in part: "(a) In general - "No state or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service. "(b) State regulatory authority - "Nothing in this section shall affect the ability of a State to impose, on a competitively neutral basis, requirements necessary to preserve and advance universal service, protect the public safety and welfare, ensure the continued quality of telecommunications services, and safeguard the rights of consumers. "(c) State and local government authority - "Nothing in this section affects the authority of a State or local government to manage the public rights-of-way or to require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis, if the compensation required is publicly disclosed by such government." Right of Way Management and Compensation Page 14 of 15 APWA Fall Conference - 2005