This article originally appeared in the April 29, 2002 MIRS Capitol Capsule. Copyright 2002, Michigan Information & Research Service. All rights reserved.

MIRS Capitol Capsule, Monday, April 29, 2002,
Issue 082, Vol. XX


QUOTE OF THE DAY


"If he can actually make this work, he'll have earned that salary."

- Diane KATZ of the Mackinac Center for Public Policy commenting on the $175,000 salary William ROSENBERG will make as head of the new broadband authority board.

Rosenberg Salary At $175,000

Today, MIRS verified that William ROSENBERG will receive a salary of $175,000, plus transportation costs, for his position as head of the newly-created Broadband Authority Board (BAB). Rosenberg, 61, lives in North Carolina and will commute to Michigan when needed.

Rosenberg, 61, was appointed by Gov. John ENGLER about a month ago to head the board. His salary level was set at the first BAB meeting on April 17. Rosenberg is a former Michigan Public Service Commission (MPSC) chairman and served as an assistant to cabinet level appointees under presidents Gerald FORD and George H. BUSH.

Last year, the Michigan Economic Development Corporation (MEDC) contracted with Rosenberg's consulting firm, E3 Ventures, to work on the state's new broadband initiative.

According to Rosenberg, the $175,000 annual salary is less than what he was paid by MEDC as a consultant.

Engler spokeswoman Susan SHAFER pointed out that Rosenberg's salary will be paid from appropriated funds.

"Ultimately, his salary will come from the $50 million that goes to the broadband authority from MSHDA (Michigan State Housing Development Authority)," Shafer said. "After they (the broadband authority) begin selling bonds, the salaries will be coming from the fees on the bonds."

Rosenberg said that the broadband authority pays the state Treasury Department, which, in turn, cuts State of Michigan checks and sends them back to reimburse those who receive salary and payments for their work on the broadband board.

"These aren't really state dollars," Rosenberg said.

Diane KATZ of the Mackinac Center for Public Policy, which opposes the broadband plan, said that she was not surprised by the size of Rosenberg's salary.

"These kind of programs tend to do more to help those involved with implementing them than they do the public in general," Katz said. "If he can actually make this work, he'll have earned that salary."

When Engler first introduced his broadband plan, which would facilitate the development of high-speed Internet, he faced a Legislature that was in no mood to support the component of the plan that called for an access fee that looked very much like a new tax. But by March, Engler had won over the Legislature by restructuring the plan in a manner that essentially eliminated the tax/fee.

The turning point was when the Senate Energy and Technology Committee changed the legislation so that supposedly no public money would be used to finance the new broadband authority and when it was assured that telecommunication companies could not pass the cost of a new 5-cent right-of-way fee to customers.

However, in place of the tax, the administration contrived a plan under which the MSHDA, which is supposed to increase the supply of housing for low-income families and seniors, would purchase a $50 million bond from the broadband authority.

Use of the $50 million basically falls under two categories, $20 million goes into a "reserve fund" to back the sale of tax-free bonds the broadband authority wants to sell to finance its projects. The other $30 million would go toward the estimated $2.3 million annual tab for the agency's administrative costs and directly for the new broadband infrastructure.

MSHDA is designed to be a self-sufficient agency that generates operating revenue through housing investments. But some would argue that MSHDA funds are public money and the $50 million bond purchase is a violation of the Legislature's intent.

Rosenberg said today that he was instrumental in the original design of MSHDA, a fact he considers as an important aspect of his resume.

Engler and the MEDC maintain that Michigan lags in broadband infrastructure. The broadband authority is charged with granting low-interest bonds to telecommunications companies interested in obtaining broadband capital. According to Engler, these loans will help the private sector deploy high-speed Internet services and generate an estimated 500,000 new jobs and $440 billion in economic output.

Critics of the governor's broadband plan, including the Mackinac Center, argue that the state actually ranks 10th nationwide in the number of high-speed Internet lines, and 11th in the number of broadband service providers.

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