BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1040 (Padilla)
Hearing Date: 04/26/2010 Amended: 04/13/2010
Consultant: Brendan McCarthy Policy Vote: EU&C 10-0
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BILL SUMMARY: SB 1040, an urgency measure, extends the sunset of
the California Advanced Services Fund. The bill authorizes the
Public Utilities Commission to collect and expend an additional
$125 million between 2010-11 and 2015-16. The bill continuously
appropriates monies in the Advanced Services Fund.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
New revenues ($25,000) ($25,000) ($25,000) Special
*
Broadband infrastructure $20,000 $20,000
$20,000Special *
Broadband consortia grants $2,000 $2,000
$2,000Special *
Broadband revolving loans $3,000 $3,000
$3,000Special *
Administrative costs $231 $406 $439 Special
**
* California Advanced Services Fund.
** California Advanced Services Fund. Costs to be included in
the costs of grants and loans above.
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STAFF COMMENTS:
Under current law, the Public Utilities Commission is authorized
to collect $100 million from a surcharge on intra-state
telephone calls. This program was initially created
administratively by the Commission and codified with the passage
of SB 1193 (Padilla, Chapter 393, Statutes of 2008).The funds
collected by the Commission are currently used to support the
development of additional broadband internet capacity,
particularly in areas of the state that are not served by
broadband service. The Commission provides grants to service
providers to cover up to 40% of the capital costs of broadband
service infrastructure.
Upon the passage of the American Reinvestment and Recovery Act
(ARRA), the Advanced Services Fund program was modified by
statute (AB 1555, Perez, Chapter 24, Statutes of 2009) and
Commission action to allow broadband providers to use Advanced
Services Fund funds to pay for the 20% local match required
under ARRA.
This bill extends the sunset of the program until the 2015-16
fiscal year. The bill authorizes the Commission to collect an
additional $125 million from telecommunication ratepayers, to be
spent over the remaining years of the program. The bill creates
three subaccounts within the Advanced Services Fund and
continuously appropriates the monies in the fund, with specified
allocations between the accounts. Specifically, the bill
authorizes $20 million per year to the Broadband Infrastructure
Grant Account, $2 million per year to the Rural and Urban
Regional Broadband Consortia Grant Account, and $3 million per
year to the Broadband Infrastructure Revolving Loan Account
(these funds would be available for future loans as repayments
are made).
The bill requires the Commission to conduct interim financial
and performance audits, in addition to the existing requirement
that the Commission conduct final audits of the program. The
interim audits are due to the Legislature by December 31, 2010,
while the due date for the final audits is delayed in the bill
to April 1, 2017.
The bill repeals the code section governing the Advanced
Services Fund as of January 1, 2018.
This bill is an urgency measure.
To date, the Commission has awarded about $87 million in grants.
The Commission indicates that there will be increased demand for
these funds to pay for the matching requirements of ARRA grants.
Although the full amounts of these match requirements will not
be known until final ARRA grant awards are made, the Commission
believes that the remaining authorized funds will be
insufficient to provide grants to pay for the matching
requirements. In addition, the Commission is concerned that they
may not be able to fully pay out new and existing grant funds
before the existing sunset date of the program.
The Commission indicates that the extension of the program will
require the continuation of existing staff costs. Additionally,
the creation of new grant programs within the program will
require additional staff to develop and oversee. The costs of
these extended and new positions will be paid out of the
Advanced Services Fund.
Because the Commission created the Advanced Services Fund
program in advance of authorizing legislation, it is possible
that the Commission may act to administratively extend the
program once this bill sunsets the governing code section in
2018.
Staff recommends the sunset provision be removed from the bill.
In that case, the Public Utilities Code would continue to
specify that the Commission could only collect a total of $225
million for this program. This would also allow the Commission
to continue administering the revolving loan program with
previously collected funds.
Staff recommends the bill be amended to remove the continuous
appropriation and provide that funds in the Advanced Services
Fund shall be available upon appropriation of the Legislature,
in order to allow for continuing legislative oversight of the
program.