HELENA — Charter Communications is proposing a state ballot measure to reclassify cable television companies’ property in Montana for tax purposes and block a tax increase of more than 300 percent.
It is intended to reverse a Montana Supreme Court decision in December that upheld how the state Revenue Department reclassified the property of Bresnan Communications. Charter now owns the cable company that Bresnan had owned from 2002-2010.
Charter filed the proposed initiative for the November ballot with Secretary of State Linda McCulloch’s office last month.
Attorney General Tim Fox’s office is reviewing the ballot proposal for legal sufficiency before the company can begin gathering signatures for the initiative.
“Charter is working to protect our customers from a more than 300 percent tax increase,” said Brian Anderson, a Charter spokesman. “We hope to find a fair solution that’s in the best interests of Charter customers and the state of Montana.”
Earlier this week, however, Sarah Cobler Leow, executive director of the Montana Budget and Policy Center, said, “If the initiative passes, our schools and other essential services would be threatened by Charter’s refusal to pay its fair share toward our state’s economic growth.”
She said the ballot measure, if approved, could raise taxes on homeowners and small businesses in more than half of the state’s counties.
The state Revenue Department declined comment Tuesday on the proposed initiative.
Charter’s draft statement of purpose for the initiative said the Revenue Department recently changed how it classified cable television companies that also provide customers with phone and high-speed Internet services.
Under Charter’s proposal, Montanans would be asked to vote “yes” or “no” on the initiative, which it said “prevents the 300 percent tax increase from becoming permanent and being passed on to consumers.”
The Supreme Court’s 5-2 decision raised Bresnan’s — and now Charter’s — annual property tax bill by 329 percent, to $7.3 million from $1.7 million, consistent with the Revenue Department’s reclassification of property.
At issue in the court case was whether Bresnan and its properties — used to provide cable television, Internet access and telephone service — should be combined in a single property tax classification as the Revenue Department did or be split among two classifications as had been the case in the past.
A Revenue Department audit in 2008 concluded that Bresnan’s division of its property into three separate entities — voice, cable and Internet — didn’t properly reflect the company’s actual use of the property.
Instead, the department classified all of Bresnan’s property as a “telecommunication services company” and ruled that all of its property should be centrally assessed, not just the 10 percent that the company had reported as two-way communication.
That reclassification put all of Bresnan’s property in Class 13, with a 6 percent tax rate.
The company historically had divided its property in different property tax classifications — cable TV systems in Class 8 with a 3 percent rate and telecommunications services in Class 13 with a 6 percent tax rate.
Then-District Judge Susan Watters of Billings had ruled in favor of Bresnan and overturned the department.
The Revenue Department appealed her decision, and the Supreme Court found in favor of the Revenue Department.
Charter bought the cable company in February 2013 from Cablevision Systems Corp., which in turn bought it from Bresnan in 2010.
To qualify an initiative for the ballot will require the signatures of at least 24,175 registered voters by June 20, including 5 percent of the voters in 34 of the 100 state House districts.