City of Lake Oswego, OR Sends
Letter to Senator Wyden
expressing concern about HR 49/S 150
October 10, 2003
Senator Ron Wyden
516 Hart Senate Office Building
Washington, D.C. 20510
Dear Senator Wyden:
The City of Lake Oswego is concerned about the impact of S.150.
We understand that you introduced this bill for the purpose of permanently
extending the existing moratorium on taxes on Internet access. However,
while the current law states that Internet access "does not
include telecommunication services," S.150 (and HR 49, its
companion bill) would change this to read: "does not include
telecommunication services except to the extent that such service
is used for Internet access."
Although the intent of this new language may have been to simply
ensure that the tax ban does not favor one technology over another,
it nevertheless has the potential to cause significant loss of revenue
for cities. The broad wording could be interpreted as banning local
franchise fees or taxes on traditional telecommunications services
whenever those services are bundled with Internet access. For decades,
Lake Oswego and other cities in Oregon have relied upon telecommunications
franchise fees as an important source of public revenue. In this
era of strapped municipal budgets, Congress should not adopt legislation
that could preempt franchise rights. Our 2003-05 budget reflects
the expected franchise fees from the three telecommunications companies
who operate within Lake Oswego to be $1,108,000. The City of Lake
Oswego strongly urges that S.150 be amended to clarify that the
bill does not preclude cities from collecting franchise fees or
taxes on telecommunications services, or from collecting right-of-way
fees or gross percentage fees. Clarity within this bill is paramount
in order to prevent litigation and the withholding of fees while
the courts decide the intent - as happened recently in connection
with Qwest's claim that federal law prohibits the type of franchise
fees charged by most Oregon cities. Please take action to prevent
S.150 from inadvertently causing serious budgetary problems for
municipalities in Oregon and across the nation.
Sincerely,
Judie Hammerstad, Mayor of Lake Oswego, OR
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