Portland Mayor Sam Adams wants to use a new tax on phone companies to pay for police reforms demanded by the federal Justice Department.
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 if the City Council approves the utility fee, according to city figures.
“I said I would find the resources for funding the DOJ agreement,” Adams said Friday, “and this is the way I proposed to do it.”
CenturyLink and Frontier would start paying the city of Portland 5 percent of their gross revenues under the plan starting Jan. 1.
The tax would bring the two companies in line with other big land-line phone service providers, such as Comcast Corp. and Integra, which have been paying that amount since the late 1990s, said Mary Beth Henry, manager of the city’s Office for Community Technology.
The new fee is expected to generate between $3 million to $5 million in extra revenue for the city, which the council would earmark for the police reforms. City documents note that the estimate is based on available industry data, but the city doesn’t have access to the private companies’ proprietary information.
“This is closing a loophole — addressing an inequity that exists now in how we charge telephone-related services in the city of Portland,” Adams said.
The city reached a settlement last month with the U.S. Department of Justice on changes to Portland police use of force policies, training and oversight, pending council approval.
It follows federal findings in September that Portland police have engaged in a pattern of excessive force against people with mental illness. The reforms are estimated to cost the city $3.5 million, but rise to $5.4 million annually to absorb funding of the city’s existing Service Coordination Team, which offers housing and treatment to frequent low-level offenders.
The money would cover 32 new staff positions — 26 within the Police Bureau and six in other city bureaus to speed up police internal affairs investigations, conduct regular audits of police services and create a new police Addictions and Behavioral Health Unit.
“I could just have equally proposed cuts to the city’s budget to implement the DOJ’s settlement. I don’t want to do that,” Adams said. “This will plug the hole I need to cover the police settlement.”
Chris Denzin, vice president and general manager of CenturyLink for northern Oregon and southern Washington, said he’s concerned about the proposal. He said he learned about it from the mayor on Wednesday.
Denzin suggested his company would consider taking legal action to block the tax.
“We are very concerned about any proposal that raises rates and affects our ability to serve Portland customers,” Denzin said. “Currently, we have franchise and license agreements that are consistent with state law. I expect the city will abide by those.”
Denzin also said the city’s contention that this would bring equity to its utility licensing fees fails to recognize that the companies don’t all provide the same service. “It doesn’t take into account we are unique from a cable company,” Denzin said. “In the overall regulatory environment, there isn’t equity.”
Currently, CenturyLink and Frontier pay 7 percent of their revenue from basic phone dial-tone service to the city. In contrast, Comcast and Integra pay 5 percent of their gross revenues to the city.
A 2009 city audit recommended that the city make utility and franchise payments “equitable across telecommunication utilities.” According to the audit, Portland’s City Council held work sessions in 2004 and 2005 on proposed updates to the city’s utility code to ensure consistent tax rates for all utilities, but never adopted the proposal.
“This tax is for the privilege of doing business in the city,” Henry said.
The mayor and Henry said they don’t expect a legal challenge to succeed, pointing to one that failed when Eugene in 1997 charged phone, cable and other telecommunication companies for using the city’s public rights of way.
Under Eugene’s 1997 ordinance, the city levies a 2 percent registration fee on all telecommunication companies operating within city limits as well as a 7 percent fee for right-of-way use. US West, AT&T, Sprint Spectrum and TCI Cable sued, arguing that the city had overstepped its regulatory authority under state and federal law. But the Oregon Supreme Court upheld the city’s fees.
“I’m confident that we would prevail because Eugene already has,” Adams said.
The revenue from Comcast and Integra fees now goes into Portland’s general fund for basic city services — and that wouldn’t change under the mayor’s proposal.
Denzin of CenturyLink declined to comment on the mayor’s plan to use the new revenue from his company and Frontier for police reforms.
“But the city really needs to fully do its due diligence on any increase that places a burden on city residents and its businesses before voting or adopting this plan,” he said.
The council is set to discuss the plan at 3 p.m. Thursday in City Hall.