NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

LFC files

SUMMARY

Synopsis of Bill

SB 86 (1) merges the two E-911 surcharges (local 911 surcharge of $.25 and the network and database of $.26 into a single surcharge of $.51; (2) expands the scope of activities that are reimbursable to local governments from the fund to include such previously non-covered expenses such as rural addressing; (3) removes the requirement for a local governing body that seeks funding for its 911 system to file an application with the local government division of the department of finance and administration requesting approval of the state board of finance for disbursement from the enhanced 911 fund and the network and the database fund and replaces it with direct disbursements to vendors or telecommunications companies with the amount of the payment approved by the state board of finance; and (4) expands the applicability of the tax (surcharge) from local exchange service customers to subscribers (retail purchasers of wire line and wireless telecommunications services that are capable of originating a 911 call).

Significant Issues

The Public Regulations Commission reports it regulates the rates and charges to telecommunications customers. However, those rates and charges do not include additional amounts that are assessed by federal and state governments, such as the 911 surcharge. Local governments are charged with the duty to provide emergency services; therefore, telephone customers, through surcharges on their telephone bills, are picking up these expenses for local governments in lieu of other revenue producing mechanisms, such as local taxes. Although this bill does not increase the existing amount of the surcharge, it does expand the scope of activities covered, and therefore may, in the future require additional funds. Also, Public regulations Commission indicates this bill expands the tax base to apply surcharges on wireless customers, a telephone customer who has a regular phone line and a cellular phone will be paying the surcharge on both phone bills.

The Department of Finance and Administration reports the bill will remove the distinction between the two surcharges (equipment, and network and database) to form one $0.51 surcharge to be called the "911 emergency surcharge" paid into the enhanced 911 fund. It will provide the surcharge to be used to pay for 911 call reception training; database addressing; purchasing, leasing, installing and maintaining 911 voice call reception and recording equipment; hardware and software for automatic number identification and automatic location identification processing; and developing and maintaining the network and database necessary to provide the enhanced 911 system's.

The revisions will also: replace "Telephone Company" with "Telecommunications Company", and defines it as "a person that provides wire or wireless telecommunications services that are capable of originating a 911 emergency call"; Include wireless (cellular) in the Act and allow for funding of the Federal Communications Commission (FCC) mandated upgrades to existing E911 systems in order to provide enhanced 911 service for wireless subscribers, and; allow the Department of Finance Local Government Division to make payment directly to a vendor pursuant to a state price agreement or to a telecommunications company on behalf of a local governing body.

FISCAL IMPLICATIONS

The Public regulation Commission reports the addition of 150,000 to 200,000 wireless subscribers to the tax base may bring in approximately an additional $1,000.0 million annually to the Enhanced 911 Fund.

ADMINISTRATIVE IMPLICATIONS

This would reduce the administration of two separate funds to one fund.

CONFLICT/DUPLICATION/COMPANIONSHIP/RELATIONSHIP

Section 63-9D-20(B) of the Enhance 911 Bond Act provides that the legislature shall not repeal, amend or otherwise modify any law that affects the 911 emergency surcharge unless the outstanding bonds have been discharged in full or provision has been made to discharge them.

OTHER SUBSTANTIVE ISSUES

The Department of Finance and Administration reports with over 33 million cellular subscribers in the United States and 9.6 million new subscribers added in 1995 alone, 30% of the 95 million calls made to 911 dispatch centers last year were from cellular telephones throughout the United States. These numbers are increasing every year. The Federal Communications Commission (FCC) mandated that by mid 2001 wireless (cellular) telephone carriers will be required to provide enhanced 911 service. This will require new equipment along with new networks and databases. The present E911 surcharge revenues from the landline customers will be insufficient to cover to cover the wireless (cellular) E911 costs.

LAT/gm