TRB President: Agency finances in ‘precarious state’

Written by  //  December 20, 2012  //  Telecommunications/Technology  //  No comments

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TRB President Sandra Torres  (Credit: © Mauricio Pascual)

TRB President Sandra Torres (Credit: © Mauricio Pascual)

Puerto Rico Telecommunications Regulatory Board President Sandra Torres on Wednesday blasted the Legislature for ransacking the agency’s finances earlier this year, when it withdrew $10 million from a self-generated fund to balance the budget. The decision, she said, left the agency’s finances in a “precarious state.”

During her turn to speak at the government transition hearings, a seemingly tense Torres said the unauthorized withdrawal — which she added has been a normal occurrence for the past 10 years — has rendered the TRB unable to pay some $11 million it owes a handful of local telecom companies involved in a dispute over subsidies that was resolved earlier this year.

“The Board had the money set aside to pay the companies once we concluded the audit, but the central government took away $10 million to balance its budget,” she said. “That is essentially the TRB’s operating budget.”

The TRB is a quasi-judicial agency established in 1996 that generates its own funding to operate, through the imposition of annual charges equivalent to .025 percent of the gross income of telecom companies with revenue greater than $25,000, while cable television companies pay 3 percent of their gross revenue. In her testimony, Torres said telecom companies generated $1.3 billion in fiscal 2012, while cable carriers generated $216.5 million during the same period.

Since 2000, the legislature has withdrawn nearly $41 million from the agency’s operational budget. Of the $10 million withdrawn earlier this year, the agency has been able to get back $2 million through a measure that required the Office of Management and Budget to seek a credit line from the Government Development Bank.

“The OMB was supposed to get an $8 million credit line, of which we’ve gotten $2 million,” she said. “Now we don’t have money to pay what we owe the carriers.”

Furthermore, she said the insufficiency will also affect the Universal Service Fund, which also fed from the TRB’s operating budget whenever there was a shortfall. From 2000 to 2010, the agency transferred a total of $8.2 million from its operating budget to the USF pool, to be able to avoid raising fees passed on to consumers.

Operational expenses soar
The funds transfer has left the TRB with a $4.1 million deficit, considering that its budget for fiscal 2013 was pegged at $14.1 million.

During the morning hearing, it was also revealed that the agency’s expenses have soared in the past two years, coinciding with the signing of several hefty contracts, including one for $1.7 million with advertising firm KOI Inc., and others for external legal and other advisory services.

Transition committee member attorney José Andreu-Fuentes also raised a red flag with regards to payroll expenses, which he calculated had increased nearly 38 percent from fiscal 2009 to fiscal 2013.

“That doesn’t make sense when considering the current administration’s policy of reducing payroll expenses,” he said.

On the other hand, he also noted a 64 percent jump in professional services fees during the same period.

Torres defended the increases by saying that the agency had to recruit additional staff to work through the audit and that paying for arbitration proceedings — which she said are commonplace at the TRB — is not cheap.

“The last one we had cost about $1 million in legal and other fees,” she said.

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