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Comcast complains that its Oregon property taxes are many times higher than what it pays in other states as a result of an obscure tax methodology called "central assessment."

(Bloomberg Photo)

A broad set of property tax cuts for Oregon telecom businesses and data centers, which sailed through the state Senate earlier this month, is finding less enthusiasm in the Oregon House of Representatives.

"I agree with several of the witnesses who feel the bill is unfinished," said Rep. Phil Barnhart, D-Eugene, Chairman of the House Committee on Revenue, after hearing testimony from companies, cities and counties that oppose elements of proposed tax cuts.

In particular, local governments say the tax breaks for cable TV and Internet companies are too steep and would cut too deeply into their revenue. The Legislative Revenue Office estimates the changes will cost $16.2 million in revenue this year, rising modestly over the next five years.

"Right now we think this is just too big of a loss," Wendy Johnson from the League of Oregon Cities testified Monday.

Senate Bill 611 arises from tech companies' concern over Oregon's unusual methodology for valuing the assets of cable TV operators, Internet service providers and data centers. It's a practice known by the arcane term "central assessment."

Oregon calculates the companies' property tax bill in part based on the value of "intangibles," including a company's brand. It's a practice that dates to the 19th Century and tech companies complain it's woefully out of date, triggering tax liabilities well above what they pay in other states.

Local officials say central assessment is holding up Google Fiber's decision about whether to bring hyperfast Internet service to the Portland area and is blocking Apple's plan to expand its data center in Prineville.

On March 2, the Oregon Senate voted 27-3 to approve SB611, which does three things:

It caps central assessment on cable TV companies, chiefly Comcast, based on a formula that draws on the historical cost of their Oregon investments and subtracts the value of their franchise agreements.

It exempts data centers from central assessment altogether.

It creates

While future central assessment revenue would be diminished, the bill's supporters say cities might never have collected that money anyway because of legal uncertainty around the issue.

And backers say the bill would encourage big new investment in the state - especially in rural Oregon, where even a few dozen data center jobs can make a substantial difference in community like Prineville, which has just 9,200 residents.

Oregon counties and cities testified Monday that they support the data center and gigabit tax breaks but object to the size of the other cuts. Portland, which has avidly courted Google Fiber, opposes the bill in its current form.

"At this point, with so many outstanding questions, we're unable to give our full support to the bill," testified Elizabeth Edwards from Portland's office of government relations.

Lawmakers said Beaverton and Washington County had expressed support for the bill. Comcast has endorsed it, too, but CenturyLink testified that it's structured to give tax breaks to its competitors but not the phone company.

Comcast didn't testify this week, but the company has said previously that its Oregon property taxes are 3.5 times higher than the average of what it pays in other states. It has cautioned that a high local tax bill could deter expensive technological upgrades to its Oregon operations.

Jody Wiser of Tax Fairness Oregon, which scrutinizes corporate tax breaks, testified Tuesday that she believes nearly all of the revenue cuts in the current bill will accrue to Comcast and she urged the House committee to revamp the bill.

"It's really just somebody stomping their feet and saying: We want a tax break," she said.

The House revenue committee has scheduled a work session on SB611 for Wednesday afternoon. If the House changes the bill it must return to the Senate so that chamber can consider the changes. That could complicate the bill's path to becoming law.

-- Mike Rogoway

mrogoway@oregonian.com

503-294-7699

@rogoway