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LAO Issues Recommendations on Broadband Program Funding

Gov. Gavin Newsom’s proposed funding for broadband infrastructure projects and programs faced pushback from the Legislative Analyst’s Office amid a looming budget deficit and the availability of federal funding.

The Legislative Analyst’s Office (LAO) has issued recommendations on the governor’s proposed 2024-25 budget related to broadband programs and projects throughout the state.

In the documents, titled Overview of Major Federal and State Broadband Programs and Projects and The 2024-25 Budget: Broadband Infrastructure, the LAO highlighted “augmentations, delays and reductions” to three broadband programs and projects at the state level.

The governor’s proposed budget changes are as follows: $1.5 billion increase to middle-mile network costs, $100 million delay in last-mile project grants, and a $250 million reduction in the Loan Loss Reserve Fund.

While the LAO did advocate for the approval of a $250 million appropriation in middle-mile network funds through the California Department of Technology (CDT) operating budget, the office urged lawmakers to reject $1.5 billion in further General Fund investment — $250 million in 2024-25 and $1.25 billion in 2025-26.

“The serious budget problem in 2024-25 and significant projected budget deficit in 2025-26 do not support the substantial General Fund investment in this proposal, particularly when detailed information is unavailable,” the report reads.

The LAO also supported the delay of $100 million from the General Fund for last-mile project grants. The report cites the availability of $1.86 billion in federal funding through the Broadband Equity, Access, and Deployment (BEAD) program.

“Reductions in proposed or scheduled appropriations of up to $550 million General Fund in last-mile project funding from 2024-25 through 2026-27 would help with the budget problem and projected future budget deficits,” the report stated.

The office also cited the need for legislative oversight as state and federal broadband infrastructure projects move from the planning phase and into implementation.

“Billions of dollars will be encumbered and expended over the next few fiscal years. To achieve the Legislature’s goals in Chapter 112 of 2021 (SB 156, Committee on Budget and Fiscal Review) and other broadband infrastructure legislation, legislative oversight of the administration’s implementation of these programs and projects will be critical to their success,” the LAO’s summary notes.
Eyragon is the Managing Editor for Industry Insider — California. He previously served as the Daily News Editor for Government Technology. He lives in Sacramento, Calif.