CenturyLink is asking a judge to decide whether Portland's new tax—intended to raise up to $5 million to pay for police reforms—is legal, and its asking to stop the tax until the question is answered.
The Portland City Council, under the legal gun itself by the U.S. Department of Justice, passed increased taxes on CenturyLink and Frontier Communications on Nov. 28. As of Jan. 1, the companies must pay the city 5 percent of their gross revenues.
However, CenturyLink says that it will not charge customers the increased tax until its suit is resolved.
"We believe the city tax conflicts with both state and federal limits on how cities can tax local telephone companies, such as CenturyLink," spokesman Martin Flynn says in a statement to WW. "However, this may change if the city tax is upheld."
Former mayor Sam Adams said when he proposed the tax that it closes a loophole: other major land-line providers, including Comcast, have been paying 5 percent of their gross revenues to Portland since the late '90s. Right now, CenturyLink and Frontier pay 7 percent of their land-line service revenues to the city.
Based on estimates, the city believes that charging on the companies' gross receipts—rather than on profit-based revenue—will bring in an additional $3 million to $5 million a year.
Chris Denzin, vice president and general manager of CenturyLink for northern Oregon and southern Washington, told The Oregonian in November that a lawsuit was likely.
Filed on Dec. 28 in Multnomah County Circuit Court, CenturyLink is asking that the court rule on the legality of the new tax and is also seeking an injunction until the legality is determined.
Portland needs the money to cover changes mandated by the DOJ in the wake of its report finding city police mistreat the mentally ill. The money will create a new police Addictions and Behavioral Health Unit, and pay for 32 new jobs, 26 of which will be within the police bureau.
A request for comment left with Mayor Charlie Hales' office was not immediately returned.