March 23, 2005 – Testifiers blasted the Economic Development Commission's recent decision to approve renewed benefits for Vitelco – also known as Innovative Telephone – during a Senate Government Operations and Consumer Protection hearing Tuesday evening.
At a March 3 executive session, the EDC voted 3-1 to approve Vitelco's renewal application, with one member abstaining.
Local attorney Maria Tankenson Hodge told committee members Tuesday she was concerned about the EDC's role in the recent tax exemptions granted to the phone company.
"It appears to me that the public interest is again being compromised," Hodge said. "While it is not illegal under the present statute for the EDC to grant a tax exemption to a public utility, there is a real question about whether they may grant what amounts to a perpetual renewal of benefits for a company that has been receiving such exemptions in one form or another for over 30 years."
Hodge said although many persons, including herself, submitted objections to the renewal of tax benefits for Innovative, the EDC went ahead and granted the benefits secretly, without giving a basis for its decision.
The EDC's decision was a "complete disregard" for the intended purpose of the tax benefit program, Hodge said, adding the program's purpose was to attract "new investment" that would create new jobs and in so doing stimulate economic growth.
"We certainly do not need to give tax exemptions to a company whose incentives to invest here are already created by an exclusive franchise from the government," Hodge said.
Luis "Tito" Morales, president of the local United Steelworkers of America chapter, agreed with Hodge.
"Vitelco is a monopoly in this territory," Morales said. "Why do we give a monopoly tax exemptions when it is already guaranteed a fixed rate of return?"
He added, "If this territory is supposed to find itself economically sound, it cannot continue to give away needed revenues. We continue to provide welfare to big businesses."
Morales said further that during a strike in 2002, Vitelco laid off 80 employees. "Up to now they have not recalled all those employees," Morales said. "The time must come when we draw the line. It's time we take charge."
Morales told the senators the makeup of the various boards and commissions needed to be changed. The EDC board, for example, should not have four members from the executive branch, Morales said, referring to EDC chairman Dean Plaskett, who also serves as Planning and Natural Resources Department commissioner; Internal Revenue Bureau Director Louis Willis, Government Employees Retirement System Acting Administrator Willis Todman and Kent Bernier, assistant to the governor for Economic Affairs.
"The labor unions should have two seats on this board, one from both districts," Morales said.
Cornelius Prior, chairman of Atlantic Tele-Network a publicly traded corporation of which Choice Communications is a subsidiary, also aired his concerns to the Senators. Prior said the local Public Services Commission has decided that competition in the telecommunications market was not in the best interest of the territory and have thwarted Choice's attempts at entering the local market.
Prior said the EDC has also denied Choice a chance to compete with Vitelco by denying him tax benefits on two occasions, in 2001 and then again in 2002 when he reapplied.
"Everywhere in the United States, and indeed throughout the world, competition has always been seen as a way to reduce rates," Prior said, except in the Virgin Islands. "You would think, in that context, especially where service is a problem, that competition would be welcome, but they have consistently denied our applications for benefits."
Prior said he is currently appealing the EDC's decision in federal court because the denial ultimately prevented competition to Vitelco, and is contrary to the guidelines of the Telecommunications Act of 1996.
Elma Osborne, St. Croix union representative and Vitelco employee, said the phone company has not invested the $100 million in the territory's telecommunications infrastructure as required in the previous benefit agreement, and asked the EDC members present what made them so sure they would invest the $75 million in the new agreement.
"We are being shortchanged, desperately shortchanged," Osborne said. "The EDC has let me down. The PSC has let me down. I feel like I have been slapped in the face."
Osborne said the territory's residents could no longer "look up to government officials.". This statement angered EDC member Willis, who was present at the hearing. Willis said it was "comments like these" that made him hesitate to return to work in the territory where hard work is not appreciated. Committee chairman Adlah "Foncie" Donastorg told him to "shut up" because he had his turn and now it was Osborne's turn to speak.
Saying she is not afraid of retribution from her employer, Osborne said the benefits packaged should not have been approved for Vitelco. Osborne said over the years Vitelco has not improved service to the territory's consumers.
"It is time that people in the Virgin Islands stand up and fight for what they deserve," Osborne said.
St. Croix union representative Dale Brown also testified in opposition of renewed benefits for Vitelco.
Committee members present were: Sens. Liston Davis, Donastorg, Louis P. Hill, Juan Figueroa-Serville, Shawn-Michael Malone and Terrance "Positive" Nelson. Sen. Ronald Russell was excused. Sen. Celestino A. White, who is not a member of the committee, was also present.
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