LePage vetoes bill to give lawmakers more say on $67 million tax increase for FairPoint

Gov. Paul LePage
Kevin Bennett | BDN
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Posted April 23, 2014, at 8:47 p.m.
Last modified April 24, 2014, at 11:19 a.m.

AUGUSTA, Maine — A bill framed by supporters as an effort to protect cable, cellphone and land-line ratepayers from a proposed $67 million fee hike was vetoed Wednesday by Gov. Paul LePage, who said the bill does nothing to address the underlying problem.

FairPoint Communications has a pending case before the Maine Public Utilities Commission in which the company is asking the board to approve a fee increase to fund FairPoint’s efforts to connect to far-removed, rural customers.

FairPoint is required by the state to be a “provider of last resort,” meaning it has no choice but to provide basic services to everyone in its service area. But the company says it’s losing money on those customers to the tune of about $67.6 million per year.

It’s asking the PUC to approve a rate increase on all cellphone, cable and land-line telephone ratepayers — whether they are FairPoint’s customers or not — to pay for the difference from the “universal service fund,” an account traditionally used to pay small, local telephone providers that serve as the provider of last resort in their service areas.

The proposed increase in the universal service fee would cost the average cellphone user about $5 per month, according to one estimate.

LD 1479, An Act to Clarify Telecommunications Regulation Reform, would prevent the PUC from collecting any additional money for FairPoint until the Legislature gives its blessing, essentially giving lawmakers the final say over the deal and its implications for Mainers.

However, if lawmakers fail to come to an agreement on the fee within 90 days after the 2015 legislative session ends, authority reverts back to the PUC to do whatever it thinks is best.

The bill also requires the PUC to report to lawmakers next year on ways to decrease the cost of universal service. It passed with bipartisan majorities in the House and Senate.

In his veto letter, LePage called the “provider of last resort” system antiquated, and said the bill would do nothing to address that problem.

“Either we need to fund this policy or it needs to be eliminated,” he said. “Simply retaining the mandate without a method for paying for it is bad public policy.”

LePage also said he took issue with the decision-making process between the PUC and the Legislature as put forward in the bill.

Rep. Barry Hobbins, D-Saco, the bill’s lead sponsor, said he was “disappointed that all of the work to protect Maine consumers may now be compromised by politics.”

“If we don’t override this veto, Maine people could be forced to pay a huge tax that will go straight into the pockets of Wall Street venture capitalists, who hold shares in [FairPoint],” he said.

Follow Mario Moretto on Twitter at @riocarmine.

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