A Multnomah County judge managed to rain down bad news on both CenturyLink and the Oregonian editorial board today—upholding an incremental land-line phone tax proposed by former Mayor Sam Adams (and loathed by the O) to help pay for police reforms put forward by the US Department of Justice.

CenturyLink had been hoping the courts would shut down the tax—approved unanimously by the Portland City Council last fall despite lobbyists' concern for senior citizens (who don't use cell phones), furtive threats of legal action, and a creepy robocall campaign by the Taxpayer Association of Oregon.

Under Adams' plan, Frontier and CenturyLink are now subject to the same tax revenue formula as every other landline provider in town. Frontier and CenturyLink had been paying taxes only on their basic voice plans, at 7 percent of revenues. They'll now pay 5 percent on all revenues—a smaller rate, but on a broader base of income—an increase that could bring Portland $3 million to $5 million a year.

CenturyLink, filing under the name Qwest and represented by high-powered law firm Stoel Rives, argued the tax was unfair because of other fees it already pays the city. It's also argued the city should similarly target wireless companies, which dominate the phone market and don't pay the same taxes land-line operators do.

Judge Henry Breithaupt had other ideas in his ruling (pdf), siding with the city and its argument that a 1997 case in Eugene on a similar dispute gave it legal cover. It's not clear yet whether CenturyLink will appeal Breithaupt's ruling.

"CenturyLink is disappointed with the court’s decision today and continues to believe that the city’s proposed fees on local telephone companies are in conflict with applicable state and federal restrictions," Chris Denzin, CenturyLink's vice president and general manager for Oregon and Southwest Washington, said in a statement. "CenturyLink continues to be committed to protecting our customers’ interests, and is considering its options, but has no further comment pending a review of the court’s decision."

The uncertainty surrounding this tax revenue probably played some role in Mayor Charlie Hales' decision to seek a $3 million council contingency fund next year. I'll update when I hear back from Hales' office with their reaction to the ruling. Even if the tax isn't further appealed, I don't expect Hales will back down from his decision to keep the piggy bank densely packed.

Update 4:46 PM: Hales' office is obviously pleased with the ruling. But Hales' spokesman, Dana Haynes, has confirmed my suspicions about the contingency plan. At least, related to this issue.

"The mayor plans no change in his recommended contingency, which, if approved, still would be less than 1 percent of the general fund."