8 Things to Know About Oregon's Tech Tax Package

The bill addresses the unusual Oregon taxation methodology known as "central assessment," which values telecom companies' property, in part, based on the value of their brand.

by Mike Rogoway, The Oregonian / March 25, 2015
Gov. Kate Brown, Oregon Flickr/Governor Kate Brown

(Tribune News Service) -- The Oregon Senate signed off Tuesday on a package of property tax breaks aimed at Comcast, Google Fiber and Oregon data centers.

The state House of Representatives approved the bill Friday 52-2 and it now heads to the desk of Gov. Kate Brown.

"In the interest of time we need to get this law to the governor, who promised me yesterday she will sign it this week," said Sen. Mark Hass, D-Beaverton, who has shepherded Senate Bill 611 through the Legislature.

But that won't be the final word on the matter - the Legislature will need to do additional work to satisfy Google Fiber.

Tuesday's 28-2 vote in the Senate addresses a thorny, unusual Oregon taxation methodology known as "central assessment," which has been tangled up in state court since 2009. SB 611 is supposed to provide clarity to companies and local governments and technology companies.

Central assessment values telecom companies' property, in part, based on the value of their brand and other "intangibles." Cable TV companies and data centers say this is an extremely unusual methodology and creates a considerably higher property in Oregon than in other states.

Google Fiber says it won't come to Portland without a change to the tax language, though language in the current bill appears to exclude the company. Lawmakers say they will begin working on a Google Fiber fix later this week.

Here are 8 things to know about the bill:

History: "Central assessment" dates to the 19th Century, when counties sought to value railroads running through their county by applying the value of the overall railroad network. Oregon updated its law multiple times to account for new technologies, including the telegraph and telephone. The current version dates to 1973, written with microwave towers in mind. Lawmakers sought to apply the methodology to future telecommunications technologies, and that's gradually expanded to include cable TV and even data centers, which aren't commonly thought of as telecom.

The law: Comcast has been fighting central assessment in court since 2009, when Oregon began applying central assessment to cable TV companies. Comcast won in lower courts but lost in October before the Oregon Supreme Court. That decision could send several million dollars in tax revenue to the counties, but some issues still have to be litigated.

What the companies pay: Telecom companies and data centers say Oregon's application of central assessment is extremely unusual because they aren't usually taxed on the value of their brands. Comcast says it pays property taxes at more than three times the rate it does in other states, with annual Oregon property tax bill of $26.1 million.

What local governments get: Oregon's Legislative Revenue Office estimates the changes would cost local governments about $8 million annually. The bill's advocates note the local governments haven't been collecting anything from central assessment while the issue has been litigated in court. They say the bill provides some financial assurance to companies and to local governments, because litigation over the issue continues in Oregon's tax court.

Data centers: The Oregon Department of Revenue concluded central assessment also applied to data centers, but state lawmakers passed a bill in 2012 that exempts data centers from the tax methodology so long as they participate in another program of property tax breaks. The companies apparently fear a mammoth tax hit when those tax breaks expire. Lawmakers say Amazon and Apple have delayed expansion plans while waiting for the Legislature to act.

Google Fiber: The company says it's "extremely unlikely" to build a high-speed fiber network in Portland unless central assessment is resolved. But language in the bill, intended to provide an exemption to gigabit service providers, appears to actually make them ineligible for the tax breaks. Lawmakers say they will fix the goof in a separate bill.

Other Oregon tech tax breaks: Generally speaking, states with the biggest economies - Texas, in particular - can afford to offer the biggest breaks. But Oregon has a variety of programs for tech companies, led by the Strategic Investment Program, which exempts Intel's equipment from most property taxes. The company's most recent deal is worth $2 billion or more to Intel over 30 years. Here's a rundown on other Oregon tech incentives.

Political contributions: Comcast is a regular contributor to Oregon campaigns; the company has given nearly $130,000 since the start of 2014. CenturyLink, which also stands to benefit, contributed more than $54,000 in the same time period. Facebook contributed about $26,000. Apple, Amazon and Google have not made Oregon campaign donations since the start of 2014.

©2015 The Oregonian (Portland, Ore.) Distributed by Tribune Content Agency, LLC


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