Burlington, Vermont - February 18, 2010
Burlington's attorney told lawmakers Thursday the city is in a difficult situation now that it has failed to pay a lender $386,000 in interest.
"We're hopeful we'll be able to negotiate, and I don't want to suggest anything to the contrary," Ken Schatz said, "but clearly we're at their mercy."
Schatz said there may be investors willing to partner with the city in operating Burlington Telecom, and it plans to put out a request for proposals soon. But the Senate Economic Development Committee asked if there was something the Legislature could do to help BT survive, such as by letting the citizens vote on whether it can use taxpayer money.
"We think taxpayers should have the ability to make a decision," Schatz said. "If general obligation bonds are authorized, it's only if the taxpayers vote to authorize them."
Schatz argued municipalities should be involved in telecommunications. That could offer choice and competitive pricing and can be a tool for economic development. But the lawyer for the state Public Service Department, Geoffrey Commons, said telecommunications is a competitive and high-cost industry with financial risk.
"The department believes the protection of taxpayers in this area is appropriate," Commons said. "In fact, the situation BT finds itself in is really a poster child for the reasons why protection of taxpayers is appropriate."
Commons said Burlington went through $17 million of taxpayer money-- money he says is unlikely to come back.
"One way to provide protection of taxpayers is to give them an opportunity to vote," he said, "and to let city officials know whether they're willing to be on the hook for this money."
Still, Commons said that wouldn't necessarily prevent such debt from accumulating.
"A concern the department does have is municipalities getting in over their heads even with voter approval," he said.
Kate Duffy - WCAX News
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