State lawmakers say they're planning to address the tax issue during the legislative session that begins next month. It's unclear if that would be soon enough for Google, which has said it could make a decision on serving Portland and its suburbs by the end of the year.
The issue dates to 2009, when Oregon moved from local assessment of cable companies' networks to "central assessment," which triggered a new tax formula that values companies' property based on the value of their brand and other "intangible" assets.
Comcast went to court to fight that ruling and, in 2009, the Oregon Tax Court concluded that the state had incorrectly applied its tax formula. That could have required 10 Oregon counties to refund nearly $17 million in property taxes they'd already collected from customers.
But the Oregon Supreme Court reversed that decision in October. At a legislative hearing on Monday, business interests and state officials warned the current formula could scare off Oregon's $1 billion in prospective investment – and could deter competitive Internet and cable TV services from coming to the state.
Google never came up by name at Monday's hearing. Portland estimates the company would spend at least $300 million if it builds a fiber-optic network to bring gigabit service to Portland, and it could spend hundreds of millions more if it serves Gresham, Tigard, Lake Oswego, Beaverton and Hillsboro, too.
"If we want to bring in additional competitors hopefully we'll have a system that wouldn't prevent them (from) making those investments," said Vince Porter, economic policy adviser to Gov. John Kitzhaber, who testified Monday.
Google Fiber announced in February that it is contemplating offering hyperfast, gigabit Internet and cable TV service in the Portland area and eight other metro areas around the country. Portland granted the company a cable franchise in June and Google reiterated last week that it expects an update on its expansion plans by the end of 2014.
Google declined to comment on the issue but two public officials, who asked not to be named talking about that company's decision-making, said they are very concerned Google Fiber might find Oregon's current tax formula prohibitive.
"There's no question Google Fiber would be subject to central assessment," said Mike Dewey, executive director of the Oregon Cable Telecommunications Association.
While Dewey said he has no knowledge of Google's plans, he said the tax issue is bound to come up for anyone considering a telecom network in Oregon. Comcast's property tax bill in Oregon is 353 percent higher than its national average, according to Dewey.
The central assessment issue has also been important to Oregon data centers, which lobbied successfully two years ago for exemptions from the tax formula. The data center industry still has concerns, according to Porter, which it hopes to see taken up by lawmakers this winter.
State Sen. Ginny Burdick, chairwoman of the finance and revenue committee that held Monday's hearing, said Tuesday that she's committed to addressing the central assessment issue in the upcoming session.
"Part of the problem is the court decision, it's not entirely clear what's covered," said Burdick, D-Portland. "What we do know is we've got a real problem and we have to address it."
Companies need "to pay their fair share," she said, but deserve some clarity on what Oregon expects.
Technology is outpacing old Oregon statutes, Burdick said, so Oregon needs "a system that is fair and creates a level playing field and gives the industry certainty."
Correction: A typographical error in this article has been corrected; counties faced the prospect of repaying property taxes, not companies.
©2014 The Oregonian (Portland, Ore.)
