LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
April 5, 1999
TO: Honorable Troy Fraser, Chair, Senate Committee on
Technology & Business Growth
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB560 by Sibley (Relating to the regulation of
telecommunications utilities and the provision of
telecommunications services.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB560, As Introduced: negative impact of $(27,614,000) 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 $(8,081,000) *
* 2001 (19,533,000) *
* 2002 (32,494,000) *
* 2003 (34,525,000) *
* 2004 (36,911,000) *
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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 $(8,081,000) $(1,435,000) $(1,251,000) $(491,000) *
* 2001 (19,533,000) (3,805,000) (3,318,000) (1,303,000) *
* 2002 (32,494,000) (6,330,000) (5,520,000) (2,168,000) *
* 2003 (34,525,000) (6,726,000) (5,865,000) (2,303,000) *
* 2004 (36,911,000) (7,190,000) (6,271,000) (2,462,000) *
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*****************************************************
* Fiscal Year Probable Revenue Gain/(Loss) from *
* Counties *
* 2000 $(151,000) *
* 2001 (402,000) *
* 2002 (668,000) *
* 2003 (710,000) *
* 2004 (759,000) *
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Fiscal Analysis
The bill would amend the Public Utility Regulatory Act to reduce the
switched-access rates of incumbent local exchange telephone companies to
6 cents a minute using a staggered approach beginning September 1, 1999.
The reduction would apply to an incumbent local exchange company with
more than five million access lines in service in the state electing
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 customers and require the reduction to 6 cents
to occur in three phases. One third of the reduction would occur on
September 1, 1999; one third would occur upon the company's entry into
the interLATA long distance market; and the remaining one third would
occur one year from the date the company entered 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 6 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 a two-cent reduction in price would occur on September 1,
1999, another two-cent reduction on September 1, 2000, and the fiscal
two-cent reduction on September 1, 2001
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 the lower prices. The figures estimated in the tables 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 to the city sales
tax, transit authority sales tax, and county sales tax as a result of
the price decrease from intrastate long distance calls. These estimated
losses are quantified in the table above.
Source Agencies:
LBB Staff: JK, TH, RT, CB