LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
April 28, 1999
TO: Honorable Steven Wolens, Chair, House Committee on State
Affairs
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB560 by Sibley (relating to the regulation of
telecommunications utilities by the Public Utility
Commission of Texas and the provision of
telecommunications services), As Engrossed
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* Estimated Two-year Net Impact to General Revenue Related Fundsfor *
* SB560, As Engrossed: negative impact of $(38,362,000) through the *
* biennium ending August 31, 2001. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2000 $(14,046,000) *
* 2001 (24,316,000) *
* 2002 (30,903,000) *
* 2003 (32,835,000) *
* 2004 (35,104,000) *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable Probable Probable Probable *
* Year Revenue Revenue Revenue Revenue *
* Gain/(Loss) Gain/(Loss) Gain/(Loss) Gain/(Loss) *
* from General from from Cities from Transit *
* Revenue Fund Telecommunicat- Authorities *
* 0001 ions *
* Infrastructure *
* Fund *
* 0345 *
* 2000 $(14,046,000) $(2,514,000) $(2,192,000) $(861,000) *
* 2001 (24,316,000) (4,737,000) (4,131,000) (1,622,000) *
* 2002 (30,903,000) (6,020,000) (5,250,000) (2,062,000) *
* 2003 (32,835,000) (6,396,000) (5,578,000) (2,190,000) *
* 2004 (35,104,000) (6,838,000) (5,964,000) (2,342,000) *
***************************************************************************
*****************************************************
* Fiscal Year Probable Revenue Gain/(Loss) from *
* Counties *
* 2000 $(265,000) *
* 2001 (500,000) *
* 2002 (636,000) *
* 2003 (675,000) *
* 2004 (722,000) *
*****************************************************
Fiscal Analysis
The bill would amend the Public Utility Regulatory Act to reduce the
switched-access rates of incumbent local exchange telephone companies by
5.85 cents a minute, using a staggered approach. The reduction would
apply to an incumbent local exchange company with more than five million
access lines in service that had elected incentive regulation under
Chapter 58 of the Utilities Code.
The bill would require long distance companies to pass on reductions in
switched-access rates to consumers and require the reductions to occur
in several phases: the first, by 2.35 cents a minute on August 1, 1999;
the second, by one cent a minute on September 1, 1999; the third, by 2
cents a minute upon the company's entry into the interLATA long distance
market, and the last, by one-half cent per minute of the one-year
anniversary of the company's entry into the long distance market.
Methodology
According to the Comptroller of Public Accounts, implementation of the
bill is expected to result in an overall price decrease of 5.85 cents per
minute for intrastate long distance calls, based on the rate reductions
required by the bill. For purposes of this analysis, this fiscal note
assumes that companies would enter the long distance market on September
1, 2000.
As a result of the price decrease, the Comptroller estimates a decrease
in the state and local sales tax collections, Telecommunications
Infrastructure Fund (TIF) assessment revenues, and Public Utility
assessment revenues, all of which are levied on telecommunications
services. However, it is also anticipated that this loss would be
partially offset by revenue from increased intrastate calls as a result
of lower prices. The figures estimated in the table above represent the
net effect of this estimated loss tempered by the estimated increase in
calling volume.
Local Government Impact
It is estimated that there would be some revenue loss due to the city
sales tax, transit authority sales tax, and county sales tax as a result
if the price decrease in interstate long distance calls. These
estimated losses are quantified in the table above.
Source Agencies: 473 Public Utility Commission of Texas, 475
Office of Public Utility Counsel, 304 Comptroller
of Public Accounts
LBB Staff: JK, BB, TH, CB