Unhappy with the FCC’s implementation of the eRate, lawmakers from both sides of the Capitol have introduced bills that would overhaul the program.
In a coordinated effort, Sen. Conrad Burns, R-Mont., and Rep. Billy Tauzin, R-La., introduced bills July 23 that would divert part of an existing 3 percent telephone excise tax to pay for the eRate. The bills also would give states the authority to administer the program instead of the FCC.
The Burns-Tauzin legislation, called the Schools and Libraries Internet Access Act, would cut the current 3 percent phone tax to 1 percent and funnel the proceeds to a “telecommunications technology trust fund” beginning next year.
The fund would be controlled by the Commerce Department’s National Telecommunications and Information Administration (NTIA), which would award the money as block grants to states. The states would pass the money along to schools, libraries, and health care providers.
Some members of Congress, Burns and Tauzin included, have blasted the FCC for creating a nonprofit corporationthe SLCto administer the eRate. Critics of the program also bristle at surcharges that long-distance companies have added to their customers’ bills to help pay for it.
Burns and Tauzin call their legislation a compromise between the program’s critics and its supporters. “In the face of calls to discontinue this program entirely, I hope the administration would support what is indeed a rational compromise,” Burns said.
“In a nutshell, what we’re doing is cutting taxes for nearly everyone in America and saving the eRate program in the process,” Tauzin said. “In politics, that’s known as a win-win.”
The telephone excise tax was instituted in 1914, when telephone service was considered a luxury, to help finance World War I. It was kept in place to combat the budget deficit. The tax generated $4.5 billion for the federal treasury last yearmore than double the cost of the eRate.
Using money from an existing phone tax to fund the eRate would eliminate the need for long-distance companies to raise their rates to pay for the program, according to the lawmakers.
As drafted now, the Schools and Libraries Internet Access Act would provide $1.7 billion for fiscal year 1999 and “such sums as may be necessary for each of the four succeeding fiscal years.” The money would fund both the eRate and universal service discounts to rural health care providers. The latter program currently is administered by the Rural Health Care Corp.
House Speaker Newt Gingrich has endorsed the Burns-Tauzin legislation, saying, “I think it’s very dangerous and, frankly, wrong to allow any bureaucracy to raise taxes on the American people.” But education groups reacted to the Burns-Tauzin legislation with caution.
“We’re very happy that Burns and Tauzin see the merit in the program and want to fund it, particularly the wiring and internal connections as well,” said Jon Bernstein, a lobbyist for the National Education Association. “That being said, we’re concerned with some of the mechanisms they’re proposing.”
The five-year sunset provision, the fact that only $1.7 billion is earmarked for 1999, and the absence of a dollar amount specified for the remaining four years of the program are causes for concern, Bernstein said.
Because the legislation doesn’t peg a dollar amount for the eRate beyond the first year, he said, the program’s funding could be subjected to the appropriations process each yearwhich, given the current climate in Congress, may spell trouble for the program.
Linda Roberts, director of the Education Department’s Office of Technology, also raised concerns about the Burns-Tauzin legislation in an interview with online news source C/Net.
“The problem with a block grant is that individual states may not make the same kinds of distribution decisions that the FCC made,” Roberts said. “I really think the FCC Joint Board of state and federal regulators made an incredible decision [when they] said, ‘No matter where you live in this country…we are really going to try to level the playing field for you.'”
Block grants also would penalize the small, rural states, Roberts said: “If [they are] allocated the way most block grants are allocated, they will be allocated on the basis of population. This is where the rural states will get hurt tremendously.”