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Legislature Considers Two New Ways to Fund Broadband

Bills aim to provide additional funding to the state's Broadband Development Office; however, each would require approval from voters before becoming law.

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View from the balcony, Texas House of Representatives Chamber in Austin.
Each house of the Texas Legislature is considering bills to add funding for state broadband efforts.

Senate Bill 377, introduced in January by Sen. Charles Perry (R), would create the Texas Connectivity Fund; House Bill 9 by Rep. Trent Ashby would create a Broadband Infrastructure Fund. Both would support the Broadband Development Office (BDO) but would need approval from voters before becoming law.

The Texas Connectivity Fund would “reform the funding process for the Texas Universal Service Fund (TUSF),” according to a Texas Farm Bureau legislative update. The fund was established in 1987 and has undergone many changes over the years, one being a 2022 temporary rate hike from 3.3 percent to 24 percent due to a Public Utility Commission shortfall.

If implemented, SB 377 would fund the TUSF and the BDO by dedicating 50 percent of telecommunications sales tax for 10 years and eliminating the TUSF fee on telephone bills.

The TUSF surcharge is levied on telecommunications companies based on long-distance service and helps pay for rural cell service, according to a Texas Tribune report on rate change. It is generally passed through to consumers.

Tallying, reporting and depositing those taxes would be the responsibility of the State Comptroller of Public Accounts. According to the Farm Bureau, some $700 million could have been generated from last year’s telecommunications sales tax revenue.

The BDO, established under the 87th Legislature, has a broadband development account with funding from general revenue; gifts, donations and grants and interest earned on accounts. The 2022-2023 legislative appropriation was $5 million, and additional funding consists of federal broadband grant monies.

According to the PUC, the TUSF supports the following programs:

  • Relay Texas
  • Specialized Telecommunications Assistance
  • Tel-Assistance
  • Lifeline
  • Link Up
  • Small Local Exchange Carriers Universal Service Fund
  • Texas High-Cost Universal Service Plan

House Bill 9, introduced March 7, would create an infrastructure fund outside of general revenue to administer the state’s broadband development program, foster community outreach for expansion and affordability efforts, and ensure the universal service program is fully funded.
Rae D. DeShong is a Dallas-based e.Republic staff writer and has worked at The Dallas Morning News and as a community college administrator.