A look at last months settlement between the state of Montana and Charter shows that the Bullock administration negotiated a settlement that is a pretty good deal for Montanans –especially when it comes to all those local governments and schools districts that have been waiting to receive millions in taxes that Charter had protested paying and couldn’t be spent.
To fully understand the settlement, there are two things we need to know first. (1) the taxes Charter owed, (2) the taxes Charter had only paid under protest and wanted back.
What Charter Owed
First, Charter owed a significant amount in back taxes for 2007-2009 based on last Dec’s supreme court ruling. The exact amount the company owed hasn’t been published, so I don’t know what it is, but we can get a pretty good estimate by looking at how much they paid in 2010 public information obtained by the Helena Vigilante. it is safe to assume that the company’s total taxes for 2007-2009 would be about $21 million ($7m for each 2007, 2008, 2009). The company that used to own Charter, Bresnan Communications, actually paid $4.4 million of those taxes, so if you subtract these you can see that the company still owed about $15 million.
What Charter Wanted Back
Now lets talk about the taxes they had paid under protest–money that local schools weren’t allowed to spend because Charter was demanding it be returned to them. For 2010-2013, Charter paid a total of $43 million, but about $34 million of that has been sitting in tax protest escrow accounts. This means that Charter was arguing that it should get ALL of this $34 million back.
Finally, the Supreme Court ruled in a separate ruling that Montana Department of Revenue was incorrectly valuing a portion of Charter’s property, called intangible personal property. The Department of Revenue was re-valuing other the telecoms’ property too, and it just announced its settlement with Verizon.) If you consider how much Verizon is receiving back, the intangible personal property may have been about 30% of the amount Charter was currently protesting.
All in All
So taking all this into consideration, the amount actually owed by Charter would have been about $10-12 million. And the amount that it was entitled to receive back was probably about $10-13 million.
Now let’s look at what the deal Bullock’s administration negotiated. Charter has to pay $8.3 million, and Charter will receive back $9 million.
The remaining $25 million in protest funds will be released to local governments and the state.
So Charter nets about $700,000. Total. That’s it. I’d call that a pretty good deal for Montana.
Especially when you compare that with what the Office of Budget and Project Planning (OBPP) estimated Charter would receive under the proposed ballot initiative: $65 million in back taxes they would get out of paying, and about $7 million future taxes they wouldn’t have to pay.
It’s also noteworthy that Charter spent over $425,000 on its signature gathering and other expenses related to the ballot initiative.
And, as Montana Budget and Policy Center points out, the company will continue to pay its fair share going forward, as a centrally assessed telecommunications company
Now, let’s answer one final question you may have heard from the Twitter conversation around this settlement, which is why did Charter take this settlement which is so obviously a win for Montana? Word on the street is that that Charter may have had the signatures to qualify I-172. If that’s the case, why didn’t the company move forward with the initiative?
First, the MEA-MFT made it clear that it would pursue a legal challenge if the initiative qualified, and that legal challenge had a good chance in the courts. While the Montana Supreme Court showed deference to the Attorney General’s decision to let the ballot initiative move forward, the Court made it clear that it was not ruling on the substantive legal challenges the measure faced.
And those substantive legal issues were significant. As readers here know, public opinion was also turning on Charter. The Billings Gazette actually issued two strong editorials opposing I-172. And thanks to good organizing, social media, creative Montanans and readers here getting the word out, people were starting to hear what I-172 was actually about, and Charter customers were none too pleased.