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Legislative Memo

BILL:

S.3245 (Wright) / A.6241 (Brodsky)

Support

SUBJECT:

Telephone corporations to offer residential rates to religious organizations

 

DATE:

January 17, 2006

 

This bill would add a new Subdivision 3-b to Section 92 of the Public Service Law to require telephone companies to provide residential rates to religious organizations and religious schools, rather than the business or commercial rates charged to other not for profit organizations.

According to the present utility tariffs, there are only two tariff rates; residence and business. Residence rates apply to a "residence;" that is, a location maintained as a home. All other locations, for telephone rate purposes, are classified as "businesses." Thus, religious organizations, clubs, hospitals and many other non-residential locations pay "business" rates. This bill would represent a precedent - setting departure from this historical distinction between residence and business service locations.

Although religious organizations and religious schools provide invaluable services to their communities, a change in the current law would provide a reduction in rates to one rate class through a cross-subsidy or reduced price for telephone service on all other rate payers. That approach shifts the burden onto the customers who pay the full rate. This legislation would thus afford a change in rate status to one class to the detriment of all other rate payers. These rate payers would then be supported by an additional rate increment buried in the charge for telephone services paid by the rest of the community -- very much like a tax, but a very regressive tax. Additionally, religious organizations, like everyone else, have the benefit of today's competitive telecommunications marketplace to shop around for lower rates.

Applying reduced utility rates to religious organizations is tantamount to a discount. In recent years, at the direction of the Public Service Commission, some telecommunications companies phased out discounts to charities because it was unjust to those who pay full rates and, in addition, have to pick up the cost of the discounts to others. This bill would be a step in the other direction and would open the door to appeals from many other organizations that render a public service to do the same. It would seem wise to avoid taking such a step. Not for profit schools, colleges and universities not formed for religious purposes but that are otherwise engaged in comparable activities would not have this special rate concession. Rate discrimination based on religious grounds could raise serious First Amendment legal problems of a constitutional dimension.

For the abovementioned reasons, The Business Council opposes this legislation, and requests that it not be approved.