LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 9, 2001
TO: Honorable Steven Wolens, Chair, House Committee on State
Affairs
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1783 by Sibley (Relating to enhanced availability of
advanced telecommunications service.), Committee Report
2nd House, Substituted
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1783, Committee Report 2nd House, Substituted: negative impact *
* of $(10,715,000) through the biennium ending August 31, 2003. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
**************************************************************************
General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(4,387,000) *
* 2003 (6,328,000) *
* 2004 5,313,000 *
* 2005 11,834,000 *
* 2006 0 *
****************************************************
All Funds, Five-Year Impact:
**************************************************************************
*Fiscal Probable Revenue Probable Revenue Probable Revenue *
* Year Gain/(Loss) from Gain/(Loss) from Gain/(Loss) from All *
* General Revenue Fund Telecommunications Local Units of *
* 0001 Infrastructure Fund Government *
* 0345 *
* 2002 $(4,387,000) $(76,570,000) $(761,000) *
* 2003 (6,328,000) (101,256,000) (1,317,000) *
* 2004 5,313,000 85,003,000 1,106,000 *
* 2005 11,834,000 189,340,000 2,464,000 *
* 2006 0 0 0 *
**************************************************************************
Fiscal Analysis
The bill would modify the Utilities Code and other statutes to ensure
that all Texans in urban and rural areas have access to advanced services
that are appropriate to their needs at reasonably comparable prices,
terms, and quality.
The bill would require all applicable companies receiving a bona fide
retail request to provide advanced services, notify the community within
30 days of the request whether the company intends to 1) provide the
services, 2) make arrangements with a third party to provide the
services, or 3) not provide the services. A company that intends to
provide the services must do so within 150 days after notifying the
community of its intention. A company may charge a higher price for an
advanced service provided under a bona fide request only if the higher
price is necessary to recover costs relating to population density,
distance or terrain. However, the higher price may not exceed a
reasonable price set by the Public Utility Commission (PUC) or 140
percent of the price in the company's exchange with the greatest number
of access lines. A company may require each person who signed the bona
fide request to commit to receiving service for one year.
If a company notifies the community it does not intend to provide
advanced services, and the PUC determines no other provider is offering
advanced services, the community may 1) provide advanced services itself,
or 2) enter into a business arrangement with a third party for the
services.
The bill would authorize rural communities to seek funds for the
deployment of advanced services through the following means: 1) projects
identified in the Development Corporation Act of 1979 (4A /4B projects),
2) Telecommunications Infrastructure Fund (TIF) 0345 grants for
community technology centers, 3) community development block grants, 4)
Texas Agricultural Finance Authority financing, or 5) other business
incentives available. The bill would allow the TIF board to use funds in
the qualifying entities account for infrastructure and related costs for
the provision of community technology centers or advanced services to
rural areas. It would further require that the TIF board give priority
to a project that will establish or enhance the provision of advanced
services to rural areas.
The bill would decrease the TIF assessment rate from 1.25 percent to 0.76
percent of the taxable telecommunications receipts of telecommunications
utilities and commercial mobile service providers beginning September 1,
2001. The bill would eliminate the statutory cap of $1.5 billion on the
TIF fund, at which time the assessment would end, allowing the fund to
continue until its sunset date of September 1, 2005. Under current law,
the assessment is project to end in fiscal 2004.
The bill would require the PUC to submit a report on the deployment of
advanced services in the state to the Legislature by January 15, 2003.
The bill would take effect September 1, 2001.
Methodology
The fiscal implications of reducing the TIF rate to 0.76 percent were
estimated using current TIF revenue projections. The fiscal 2002
estimate reflects a September 1, 2001 effective date.
According to Comptroller estimates, the bill would affect state and local
sales tax collections negatively in fiscal years 2002 and 2003, but
create a positive revenue due to the elimination of the fund cap. The
effect on sales taxes is because the TIF assessment is included in the
sales price of telecommunications services and therefore subject to
state and local sales tax. The effect on state sales taxes deposited to
the General Revenue Fund 0001 was estimated by applying the state sales
tax rate of 6.25 percent to the estimated fiscal impact on the TIF and
adjusting for a September 1, 2001 effective date.
Local Government Impact
The fiscal impact to local tax revenues were calculated proportionally to
the effects on state tax revenues.
Any fiscal impact to units of local government that would become eligible
to receive grants and loans from the TIF Board under the bill would
depend upon the number and amount of grants and loans that might be
awarded to deploy advanced services. Any fiscal impact to cities and
counties would depend upon the number of rural advanced services
projects and the number of cities and counties that would adopt or
increase such a tax.
Source Agencies: 475 Office of Public Utility Counsel, 473 Public
Utility Commission of Texas, 304 Comptroller of
Public Accounts, 367 Telecommunications
Infrastructure Fund Board
LBB Staff: JK, RB, RT, KM