BILL ANALYSIS
Appropriations Committee Fiscal Summary
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| |140(Strom-Martin) |
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|Hearing Date: 7/16/01 |Amended: 7/3/01 |
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|Consultant: Lisa Matocq |Policy Vote: E, U & C |
| |9-0 |
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BILL SUMMARY: AB 140 (1) requires the Public Utilities
Commission (PUC), until January 1, 2006, to establish a
grant program for the construction of telecommunications
infrastructure, as specified, in areas not currently served
by existing local exchange carriers, and (2) provides that
up to $10 million annually may be used from the existing
California High-Cost Fund-A Administrative Committee Fund
(CHCF-A) or the California High-Cost Fund-B Administrative
Committee Fund (CHCF-B), or both, as determined by the PUC,
for the grant program.
Fiscal Impact (in thousands)
Major Provisions 2001-02 2002-03
2003-04 Fund
Telecommunications $10,000 annually until 1/1/06
Special*
infrastructure grants
*CHCF-A and/or CHCF-B
STAFF COMMENTS: This bill meets the criteria for referral
to the Suspense File. The bill:
provides that community-based groups representing
qualifying communities may apply for need-based grants to
build original telecommunications infrastructure,
provides that grant applications that are rejected may be
reimbursed by the PUC for their costs of preliminary
engineering, and other specified expenditures,
provides that corporations receiving transfer payments
shall continue to be fully reimbursed for the costs they
are entitled to recover,
requires the PUC to establish a working group to develop
technical criteria for evaluating grant applications,
prohibits any expenditure from the CHCF-B for the grant
program until the U.S. Supreme Court makes a decision in
a specified case.
The revenues in the CHCF-A and CHCF-B are derived from
surcharges on telephone bills. The CHCF-A funds provide
subsidies to small , independent telephone companies
providing telephone service in mostly rural, high-cost
areas where rates may be set below their average cost to
serve these customers. The surcharge, which is currently
zero because the program has been using up a substantial
reserve, will be reactivated this summer.
The surcharge for the CHCF-B is currently 2.6%. The
surcharge revenues provide about $480 million annually in
universal service subsidies to ratepayers (roughly four
million customers at an average of $125 per customer per
year) in the high cost areas of the service territories of
Pacific Bell and other large telephone companies. The fund
has reserves of $953 million (about $500 million represents
prior year liabilities).
AB 1825 (Strom-Martin) of 2000 was substantially similar to
this bill. It was vetoed by Governor Wilson. In his veto
message, the Governor expressed concern about diverting up
to $10 million a year from the California High-Cost Funds
because it could reduce the amount of subsidies available
to other rural ratepayers. AB 140 addresses this concern
by prohibiting the use of CHCF-A and CHCF-B funds until
certain conditions have been met, one of which is that the
PUC must be current on all claims made by carriers for
service provided in high-cost areas.