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Lawmakers Close Out 2010 Session
State lawmakers have dropped the gavel on the 2010 legislative session, closing out a year dominated by the challenge to craft a balanced budget in light of a dramatic drop in state revenues. The budget shortfall affected several issues important to the state's business community, including major initiatives on economic development and jobs. The state's financial forecast is also likely to impact the 2010 elections as well as the next legislative session.
Despite a contentious debate among stakeholders over the access reform issue, the telecom industry fared very well this year. Early in the session it became clear that opposition to a state access replacement fund from both potential industry contributors and key legislators would short-circuit that option. The House then quickly took the lead in moving the issue, passing legislation that would reduce the intrastate access rates of the state's largest ILECs by five percent each year for ten years. The bill, HB 1750, exempted small ILECs and four rural CLECs from the required rate reductions.
The bill moved to the Senate where it languished for several weeks while that chamber debated its version of access rate reform. When floor debate produced gridlock on the issue, the House bill was advanced and amended to require access rate reductions of six percent each year for the next three years, with the first reduction required by March 1, 2011. Small ILECs and rural CLECs retained their exemption in the Senate version as well.
Despite months of negotiations over the details of the bill, final passage came swiftly and strongly once an industry compromise was hammered out. The Senate approved the measure on a 31-2 vote on May 4, and the House sent the bill to Governor Nixon two days later by a 148-7 tally.
Although some would contend that the bill does not make deep enough reductions in intrastate rates, most stakeholders see it as a reasonable compromise in light of pending action on the access issue at the FCC and the legislature's entrenched opposition to a state fund that would facilitate more rate cuts. Passage of HB 1750 will likely take the issue off the legislative agenda for at least the next session while rate cuts begin to go into effect.
Final action on other industry issues was positive as well. Governor Nixon has already signed legislation into law that overturns a recent Missouri Department of Revenue policy that would have required telecom providers to collect sales tax on certain sales of Internet service and all sales of telecommunications service to local governments. The bill, SB 928, was supported by MTIA and several business organizations.
Although approved by the House, legislation that would have relieved telecom providers of their "carrier of last resort" obligations in limited circumstances did not advance after the bill was opposed by CWA and other labor unions. An effort to move enforcement of the state's One Call law to the Missouri PSC never got off the ground but action on that issue is likely in the 2011 session. Likewise, the perennial effort to tax wireless calls to fund local 911 centers received half-hearted attention very late in the session and will no doubt be back next year.
Industry assessment funding for the OPC advanced further this year than in recent sessions due to the late support of the electric and natural gas industry. Those utilities attempted to strike a deal that would reduce their rate case review from 11 to six months in exchange for their support of the funding plan. Opposition from the Governor's office and the press scuttled that deal in the last days of the session. MTIA had been able to amend the bill to limit telecom's assessment to no more than 10 percent of the total OPC budget. With continuing pressure on the state's general revenue budget, look for that effort to return in the 2011 session.
Legislation that would have provided tax incentives for the construction and expansion of data centers fell victim to legislative opposition to extending tax breaks in a weak economy. In light of business support for the plan, this idea could return next session as well.
Weekly Coverage Online:
For the latest on industry issues please visit our current Manager's Memo.
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