Bill Summary – FastDemocracy

Legislative Analysis
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EXEMPT CERTAIN BROADBAND GRANTS FROM
                                                                             http://www.house.mi.gov/hfa
TAXABLE INCOME UNDER INCOME TAX ACT
                                                                             Analysis available at
House Bill 5682 (H-1) as reported                                            http://www.legislature.mi.gov
Sponsor: Rep. Jenn Hill
Committee: Energy, Communications, and Technology
Complete to 6-20-24
SUMMARY:
       House Bill 5682 would amend the Income Tax Act to allow grant money related to broadband
       expansion that was received under specified government programs to be deducted from the
       taxable income of both individual and corporate taxpayers under the act. Expenses attributable
       to those grants, including depreciation, could not be deducted. The bill states that it is
       retroactive and would apply for tax years beginning on and after January 1, 2023.
       Specifically, for tax years beginning on and after January 1, 2023, a person subject to tax under
       the act could deduct, to the extent included in adjusted gross income (or, for a corporate
       taxpayer, federal taxable income), grant money received from a grant issued under any of the
       following by Michigan or another state, a Michigan political subdivision, or the federal
       government under a state, local, or federal program for the purpose of providing, improving,
       or expanding broadband expansion in Michigan:
           • The Broadband Expansion Act of Michigan.
           • The federal Broadband Equity, Access, and Deployment program.
           • The federal Middle Mile grant program.
           • The federal Connect America Fund, Alternative Connect America Cost Model, and
               Enhanced Alternative Connect America Cost Model programs administered by the
               Federal Communications Commission (FCC) under the FCC Connect America Fund
               Order 14-190, 80 FR 445, 353, including various phases and revisions.
           • The federal Rural Digital Opportunity Fund established and administered by the FCC.
           • The federal ReConnect program, also known as the Rural eConnectivity program.
           • The federal Tribal Broadband Connectivity program administered by the National
               Telecommunications and Information Administration (NTIA).
           • The Broadband Infrastructure program administered by the NTIA.
           • The federal Coronavirus Capital Projects Fund.
           • The federal State Digital Equity Capacity grant program.
           • The federal Digital Equity competitive grants program.
           • The federal Rural Broadband Access Loan And Loan Guarantee program administered
               by the U.S. Department of Agriculture Rural Utilities Service.
           • The Connecting Michigan Communities grant program established under section 806
               of 2018 PA 618 and section 841 of Article 5 of 2020 PA 166.
       For the same tax years, a person would have to add, to the extent deducted in determining
       adjusted gross income (or in arriving at federal taxable income), expenses, including
       depreciation, attributable to an eligible grant listed above.
       MCL 206.30, 206.623, and 206.815
House Fiscal Agency                                                                           Page 1 of 2
FISCAL IMPACT:
       House Bill 5682 would reduce general fund revenue over the next four fiscal years by between
       $1.3 million (FY 2023-24) and $5.4 million (FY 2026-27), according to the Department of
       Treasury. Beyond that forecast window, it is assumed that the impact will remain within that
       range through the termination of grant projects. The bill could present a timing issue when it
       comes to reconciling receipt of the grant proceeds and the year in which the expenses occur for
       net income purposes.
       As of this writing, it is estimated that over $2.3 billion of eligible broadband grants have been
       awarded. To the extent that some portion of the awards went to entities or individuals not
       subject to taxation, that would mitigate the fiscal impacts noted above. It should also be noted
       that the annual fiscal impact assumes relatively stable distribution of grant awards across fiscal
       years. Any change in this distribution would alter the fiscal impact across fiscal years.
POSITIONS:
       Representatives of the following entities testified in support of the bill (5-22-24):
          • Broadband Association of Michigan
          • Peninsula Fiber Network
       The following entities indicated support for the bill (5-22-24):
          • AT&T
          • Southeast Michigan Council of Governments
                                                           Legislative Analyst: Rick Yuille
                                                                Fiscal Analyst: Ben Gielczyk
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency                                                HB 5682 (H-1) as reported   Page 2 of 2
Statutes affected: 
Substitute (H-1): 206.30
House Introduced Bill: 206.30
As Passed by the House: 206.30