LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 69 HLS 201ES 176
Bill Text Version: ENROLLED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: July 7, 2020 9:13 AM Author: DESHOTEL
Dept./Agy.: Revenue
Subject: Exemption: Fiber-optic Cable Analyst: Benjamin Vincent
TAX/SALES-USE-EXEMPT EN -$750,000 GF RV See Note Page 1 of 1
To provide for a sales and use tax exemption on the sales of certain fiber-optic cables (Item #31)
Present law subjects sales of taxable items at a state rate of 4.45% via four separate levies thru June 30, 2025, and
exempts certain items from the levies. Additionally, these items are subject to sales tax by political subdivisions.
Proposed law authorizes a rebate on 50% of state and local sales and use tax paid on items that it defines as “fiber-optic
cable equipment”, including telecommunications fiber, wires, poles, supports, lashing cable, conduit, hand holes, and
customer premise equipment, if paid by a census block winner of a Federal Communications Commission Rural Digital
Opportunity Fund Auction for distributing broadband networks to unserved areas.
Proposed law specifies that each eligible item will only be eligible for a single rebate, and that subsequent sale or resale of
the item shall not be eligible for the rebate.
Proposed law additionally excludes purchases paid with state or federal funds from rebate eligibility, unless the funds are
reported as taxable income or are structured as repayable loans. Effective July 1, 2020.
EXPENDITURES 2020-21 2021-22 2022-23 2023-24 2024-25 5 -YEAR TOTAL
State Gen. Fd. $0 $0 $0 $0 $0 $0
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total $0 $0 $0 $0 $0 $0
REVENUES 2020-21 2021-22 2022-23 2023-24 2024-25 5 -YEAR TOTAL
State Gen. Fd. ($750,000) ($750,000) ($750,000) ($750,000) ($750,000) ($3,750,000)
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other DECREASE DECREASE DECREASE DECREASE DECREASE
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds DECREASE DECREASE DECREASE DECREASE DECREASE
Annual Total
EXPENDITURE EXPLANATION
LDR anticipates minor implementation and processing costs associated with the development of forms and related
documents for the rebate process. Local authorities would additionally incur minor processing costs.
REVENUE EXPLANATION
Proposed law would allow a rebate on 50% of state and local sales and use tax paid on eligible fiber-optic cable equipment
purchases by winners of Rural Digital Opportunity Fund Auctions. Proposed law restricts eligible purchases to purchases not
paid for by federal or state funds, unless such funds are reported as taxable income or are structured as repayable loans.
Due to the unknown number of participants that will operate in the state and receive awards from the FCC, in addition to the
wide variety of equipment eligible for the rebate in proposed law, a reliable estimate of the magnitude of the revenue impact
is not possible. A rough estimate based upon several assumptions including estimated total spending per structure,
estimated expected awards in the state, estimated timing of awards, and estimated timing of eligible expenditures over the
life of the federal program yields an initial estimate of approximately $750,000 in rebates over FY21 and each subsequent
fiscal year through FY25.
State revenue losses would accrue primarily to the state general fund, but with some small portion also accruing to tourism
and economic development dedications of sales tax collections.
Local revenue losses would also occur, and depend on the tax rates in the particular jurisdictions receiving broadband
service.
Senate Dual Referral Rules House
13.5.1 >= $100,000 Annual Fiscal Cost {S & H} 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
Gregory V. Albrecht
x 13.5.2 >= $500,000 Annual Tax or Fee 6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} Chief Economist
or a Net Fee Decrease {S}