Sunset provision for 2.5 percent telecom fee defeated

A bill that would provide a sunset provision to the newly enacted 2.5 percent charge on annual gross revenues on telecommunication companies was defeated yesterday at the House of Representatives, 7-5-3.

Authored by Rep. Clyde Norita, House Bill 14-325 aimed to amend Public Law 14-53, which imposed the 2.5 percent telecom fee.

The bill said that the provision “shall sunset 30 days” after its enactment and that the fee shall revert to .5 percent.

The House minority led by minority leader Rep. Arnold I. Palacios and Rep. Heinz S. Hofschneider, said the bill is a “self-insult” and “a special interest bill.”

“It’s unconscionable to vote for this. This is unconscionable behavior of the Legislature to do this,” said Hofschneider, noting that P.L. 14-53 just passed the Legislature last year and was signed into law in January this year.

Besides, he said, he has not seen any representative from Verizon or its buyer, Pacific Telecom Inc., or the Commonwealth Telecommunications Commission requesting for the sunset provision.

“Who the heck requested ourselves to do it?” Hofschneider asked.

House Speaker Benigno R. Fitial said that P.L.14-53 came about because it was an item in the settlement agreement for the sale of Verizon.

Further, Fitial said that P.L.14-53 came about “because the Legislature failed to provide funding for CTC.”

P.L. 14-53 provides funding for CTC by allowing the latter to charge telecommunication companies 2.5 percent of their annual gross revenues. Before this, CTC’s charge was .5 percent or about $80,000.

During his remarks, Fitial said “there is a conflict now on the 2.5 percent.”

“We have a problem now which we hope to resolve through this bill,” he said, citing that Verizon “refused to pay 2.5 percent as billed by CTC.”

“Let’s not talk about windfall profit. We have to look at the new investors coming to town. We need to be business-friendly,” said Fitial. Further, he said that Verizon employs mostly local residents.

Hofschneider replied, saying that CTC was created during the 12th Legislature when Fitial was House speaker. “CTC is your creation. I was never in favor of it. We didn’t have to create CTC. There’s the Commonwealth Utilities Corp. board,” said Hofschneider.

He said that prior to the Verizon-PTI sale issue, nobody complained about raising the CTC funding.

Fitial said CTC, which had been getting financial assistance from the administration and the Attorney General’s Office, needs its own funds to keep its independence.

When reached yesterday, Verizon general manager Tony Mosley said that Verizon is not refusing to pay the charge but is seeking clarification from CTC on the 2.5 percent billing.

“There s no refusal on our part to comply with the law. We’ve asked CTC for some clarification and that’s where we are currently set. We are law-abiding citizens,” he said.

He said that the 2.5 percent increase was part of the settlement agreement but on the condition there should be a “pass through” provision, which would allow the telecom firm to pass on the additional cost to their customers.

He said the law, P.L. 14-53 is silent on the pass-through issue. The CTC, he said, has the authority to rule on the issue now.

“We want to clarify whether or not they are going to allow us the pass through. We want to be clear,” he said.

Further, Mosley said that the law allows CTC to charge “up to” 2.5 percent; it does not say it has to be 2.5 percent.

Those who voted “yes” to the proposed sunset provision were Fitial, Norita, vice speaker Tim Villagomez, and floor leader Oscar M. Babauta, and Rep. Jesus Lizama.

In introducing the bill, other supporters included Reps. David Apatang and Martin Ada. Apatang was absent in yesterday’s session while Ada abstained.

Two other leadership members, Reps. Crispin Ogo of Rota and Norman Palacios of Tinian also abstained.

Those who voted “no” were Reps. Arnold Palacios, Hofschneider, Joseph Deleon Guerrero, Janet Maratita, Ramon Tebuteb, Justo Quitugua, and Benjamin Seman.