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Legislative Analyst Examines Broadband Funding

The Legislative Analyst’s Office, which advises lawmakers, has reviewed several funding streams for broadband that have been made available by the federal government and codified in the state budget.

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In a recent Budget and Policy Post, the state Legislative Analyst’s Office (LAO) examined how lawmakers agreed to fund broadband infrastructure in the current and upcoming fiscal years.

There’s a lot to consider for LAO, which advises the Legislature on matters of finance and policy. As it points out, Gov. Gavin Newsom and legislators approved spending a breathtaking $6 billion on broadband infrastructure in three fiscal years starting with the current 2021-2022 Fiscal Year state budget that began July 1. Of the $6 billion, there’s nearly $4.4 billion appropriated in FY 2021‑22, the LAO notes — $4.3 billion in federal American Rescue Plan (ARP) Act fiscal relief funds, and $50 million from the General Fund. Among the takeaways:

  • California state government stands to receive about $27 billion, LAO said, from the ARP’s Coronavirus State and Local Fiscal Recovery Fund, and $550 million from its Coronavirus Capital Projects Fund (CCPF). The state will then have until Dec. 31, 2024, to commit that money to be spent. It will have a bit longer, until Dec. 31, 2026, to actually “expend” the money, LAO said in its post, on “a variety of purposes including broadband infrastructure.”
  • The Newsom administration and lawmakers agreed to spend that $6 billion over three fiscal years, beginning July 1, on three broadband infrastructure projects and programs Newsom proposed in his May revision of the then-proposed state budget. Delving further into its divisions beyond what’s stated above, there’s $50 million from the General Fund and slightly more than $1.6 billion from the General Fund that, “while intended by the administration and Legislature to be committed to broadband infrastructure, would need to be appropriated by the Legislature in 2022‑23 and 2023‑24,” per LAO.
  • Where is that money targeted? There’s $3.25 billion for middle-mile networks. That’s money, the LAO said, from California’s ARP “fiscal relief allocation” during the current fiscal year, for the California Department of Technology to “implement the middle-mile network through the department’s Office of Broadband and Digital Literacy (OBBDL).” State law, LAO said, “requires CDT’s OBBDL to work with a third-party administrator to implement the middle-mile network.” The funding is available to be allocated through Dec. 31, 2024, and for “encumbrance and liquidation” through Dec. 31, 2026.
  • There’s also $2 billion for last-mile projects. The state’s spending plan delivers a little over $1 billion in FY 2021‑22 and indicates the intent to commit $125 million from the General Fund in FY 2022‑23 and $803 million from the General Fund in FY 2023‑24 to the California Public Utilities Commission from ARP allocations. Of the $1 billion, LAO said, $550 million is from the ARP CCPF allocation and $522 million is from ARP fiscal relief fund allocation. The money is destined to be “deposited into a new Federal Funding Account within CPUC’s CASF (California Advanced Services Fund) program to provide last-mile broadband infrastructure project grants.” And $22 million from ARP fiscal relief funds is earmarked for “CPUC support and technical assistance with broadband infrastructure projects and programs,” and can be allocated by the CPUC through Dec. 31, 2024, and “encumbered and liquidated” through Dec. 31, 2026. And there’s $750 million this fiscal year to capitalize a new Broadband Loan Loss Reserve Fund in CASF, with the intent, LAO said, “to commit an additional $125 million General Fund in 2022‑23 and $575 million General Fund in 2023‑24.”
  • Two forms of oversight will look in on all this fairly soon. California state Senate Bill 156, which Newsom signed in July, requires CDT to work with the Department of Finance to produce a report by March 1 and yearly thereafter, updating budget committees on middle- and last-mile implementations. And organizations receiving last-mile project grants via CASF are required to report monthly to CPUC on fund expenditures for contracts or subcontracts over $25,000.
Theo Douglas is Assistant Managing Editor of Techwire.