HB 2770 Would Create Task Force to Determine Appropriate Incentives

The House Committee on Revenue on May 25th amended and passed out House Bill (HB) 2770, which repeals the “gigabit exemption” from property taxes adopted in 2015 as part of the major revision to central assessment of communications companies – Senate Bill (SB) 611. HB 2770 also created the Task Force on Broadband Communications Infrastructure.

The gigabit exemption has been controversial since its creation. In 2015 there was anticipation that Google would install a major high-speed system in Portland, if the gigabit exemption was available as enticement. Notwithstanding the adoption of the exemption, Google changed its business plan and is now emphasizing innovative wireless systems.

Nevertheless, Comcast added capacity and claimed that it qualified for the exemption. The Department of Revenue denied the Comcast application, and once again Comcast is in court appealing the Oregon Department of Revenue (DOR) determination and assessment.

The gigabit exemption was justified in 2015 to encourage new technology that was not then in Oregon, and the cost to provide the fiber optic technology was high. Moreover, the value of intangible property that would be exempted from property taxation was very large compared to a company’s real and personal property. And Oregon wants gigabit service throughout the state.

In communications technology, times change quickly. Google did not come. The exemption became an unjustified revenue loss when companies begin to look to the exemption to upgrade their gig service at infrastructure costs significantly less than anticipated. Today the exemption upsets the goal of competitive parity with different communications business and service types.

The new task force would have four members appointed by legislative leadership with the Director of the Oregon Business Development department serving as the fifth. The task force is to evaluate the viability, impact, and effectiveness of a variety of incentives, and make recommendations to the legislature no later than September 15, 2018.

Contributed by: Gil Riddell | AOC Policy Director