By Ron Thaniel
March 7, 2005

Conference Mayors and Business Community Task Force Chair Laredo Mayor Elizabeth Flores and Urban Economic Policy Standing Committee Chair Jackson Mayor Harvey Johnson March 1 represented the U.S. Conference of Mayors in the second meeting between state and local government associations and communications industry stakeholders from telecommunications, cable, satellite and Internet sectors. Conference of Mayors Communications Task Force Chair Arvada (CO) Mayor Ken Fellman represented the National League of Cities (NLC) along with their (NLC) President Washington, DC Mayor Anthony Williams.

This high-level meeting between elected officials and industry CEOs and vice presidents was held during the National Governors Association (NGA) Winter Meeting in Washington, DC.

In addition to NGA Chair, Virginia Governor Mark Warner, who is chairing the ongoing communications discussions between the government associations and industry, other governors engaged in the discussion were Indiana Governor Mitch Daniels, Washington Governor Christine Gregoire, Ohio Governor Bob Taft, West Virginia Governor Joe Manchin, Kansas Governor Kathleen Sebelius, Delaware Governor Ruth Ann Minner, Georgia Governor Sonny Perdue, Arkansas Governor Mike Huckabee, Mississippi Governor Haley Barbour, Tennessee Governor Phil Bredesen, North Dakota Governor John Hoeven, Louisiana Governor Kathleen Babineaux Blanco and Guam Governor Felix P. Camacho.

This second meeting is a result of the successful first meeting between state and local government and stakeholders from the communications industry held on December 15, 2004 at the National Governors Association in Washington, DC. Representing the Conference at that meeting were Conference President Akron Mayor Don Plusquellic and Conference Advisory Board and Communications Task Force Chair Dearborn Mayor Michael A. Guido. The following are draft principles that evolved from the December 15 talks:

• Technology Neutrality should be the goal of all communications legislation. Communications services, regardless of the technology platform, should be treated on a non-discriminatory basis by federal, state and local governments. This does not mean, however, that a service that employs a communities' rights'of-way or other assets should not have to pay a fair and reasonable rental fee for the use of that asset.
• Outcome should be revenue neutral at the state and local government levels. In negotiating reform principles, states and localities should be committed to working to develop solutions that are revenue neutral at the state and local government levels. This agreement must be in place or local governments will find themselves agreeing to give up revenues protected today in federal law, only to find industry lead efforts to cut fees and taxes at the state level.
• The federal government should not preempt state and local government taxing authority. While the restructuring of state and local taxing authority may occur, the result of any communications tax reform should not be used to reshape the division of taxing authority between federal, state and local government.
• State and local role in preserving public interest obligations should be respected. While taxation and regulatory authorities will be negotiated separately, all parties should embrace the goal of meeting public interest obligations. This may only be achieved by preserving state and local franchising authority.

Transition time will be necessary. A time of transition must be incorporated for all parties to adjust to any agreed upon communications reform. The changes contemplated require federal state and local legislation. Failure to provide sufficient time would negate ability to make rules technology neutral while holding local government harmless from a financial standpoint

At the March 1 meeting, Laredo Mayor Elizabeth Flores told the participants that "the Conference is willing to engage the communications industry with the understanding that the industry is not aggressively lobbying Congress to introduce legislation undermining the discussions." The telecommunications sector, in response, said they were willing to hold off legislation for now.

Central to the Conference's argument and expressing disappointment that the discussions are only focused on telecommunications taxes, Flores told the participants "local governments care about more than just money."

"If we cared only about money, we could embrace the proposals some have put forward that appear to hold state and local government harmless," said Flores.

Furthermore Flores stated "I say -appear- because while the industry is here in Washington talking about paying fees, the communications industry is before the FCC, the Congress and state legislatures looking to exempt themselves from traditional taxes, fees and social obligations including universal service, 911, PEG support (public, educational and governmental channels) based upon their employment of Internet Protocol (IP) based services."

Responding to a statement from a state representative that local governments might take an initial telecommunications tax loss, which would be made whole over a period of time with a broader base of telecommunications participants, including satellite and Internet, Jackson Mayor Harvey Johnson told the shareholders that mayors support broadening the telecommunications tax base; however, made it clear that cities are not willing to take a reduction in telecommunications taxes, even if temporary, stating "local governments must continue to have sufficient telecommunications taxes to fund critical public services that make communities safer and more livable, from homeland security interoperable communications to general police and fire protection through 911 services, to high quality education programs that allow citizens to make full use of the rapid changes in technology closing the digital divide."

All participants agreed to continue discussions in April on a host of complex issues ranging from state and local tax authority and competitive neutrality to revenue neutrality.