Portland’s City Council Wednesday unanimously voted to extend a tax to all land-line phone service providers – an idea that Mayor Sam Adams pushed to raise millions of dollars a year for federally-mandated police reforms.
The vote came amid protest from representatives of Century Link and Frontier, two of the companies that would be affected. The Taxpayer Association of Oregon also conducted a phone campaign in recent days, opposing the tax.
The phone company officials warned that the tax would increase rates for their customers, and is not equitable because it fails to tax wireless phone service providers.
But the mayor and commissioners said the additional tax is appropriate.
“In terms of being fair to everybody receiving the same services, this is a first step towards tax parity,” said Commissioner Amanda Fritz.
Fritz pointed out that how the new revenue is spent will be up to next year’s City Council.
CenturyLink and Frontier, which have been in Portland longer than other land-line services, are taxed 7 percent of the revenue they earn from basic phone service.
Comcast and Integra, which entered the market more recently, pay 5 percent of their gross revenues to the city, which includes revenue from other land-line phone services such as call waiting, voice mail or caller ID.
Under the plan approved, CenturyLink and Frontier would start paying the city 5 percent of their gross revenues, starting Jan. 1.
The new taxes are expected to generate between $3 to $5 million a year.
The mayor has argued that his plan would bring CenturyLink and Frontier in line with the other big land-line providers.
“This is an incremental step towards equity,” Adams said Wednesday. He urged the council in the coming year to address taxing wireless phone providers, and said he’d testify in support of such a plan as a citizen.
Adams said the additional revenue will help the city pay for the estimated $5.4 million annual cost to adopt police reforms, under the city’s agreement with the U.S. Department of Justice.
Commissioner Dan Saltzman said he was not convinced the $5 million amount “is really what’s needed.”
Yet he supported the phone tax, with some reservations. He said he recognizes there’s still disparity because wireless phone providers are not included.
“I find this issue to be a vexing one, and it does disproportionally affect seniors,” Saltzman said.
But he said phone land lines “continue to be a bargain.”
“This tax is going to be a modest tax, probably an additional $12 a year,” for customers, Saltzman said. He further promoted the usefulness of land-line phones, saying they’re more trustworthy during emergencies when the power goes out.
The city estimated that customers who get their land-line phone service from CenturyLink or Frontier, for example, could see their monthly bills rise by $3.84 to $9.24 a year because of the new utility tax.
Earlier this month, the council unanimously approved a negotiated settlement with federal officials that calls for reforms to police policies, training and oversight. The agreement came after the Justice Department found police engaged in a pattern of excessive force against people with mental illness.
Commissioner Nick Fish said he was disturbed to have received a robocall at his home Tuesday night, from the taxpayers’ association opposing the tax. He said he was going to follow up with his phone provider to see if his customer information was given to the advocacy group without his consent.
Fish said he supported the tax. He signaled that he hoped the future council will consider taking up the issue of wireless phone service.
Commissioner Randy Leonard called the tax “a small incremental increase to pay for important services.”
“We have a revenue issue in this city that this alone will not fix” Leonard said, “but it helps a little.”
Jason Williams, executive director of the Taxpayers Association of Oregon, said he was disappointed by the council vote.
“We’re concerned Portland just raised a multi-million dollar tax on seniors to pay for their legal bailout -for something that has nothing to do with phone service.”
Williams said the increased rates to customers will unfairly impact seniors who rely on land-line phones.
Speaking of the City Council members, Williams said, “To them it’s free money, but to seniors and low-income people it’s not.”