SB 0628 - Fiscal Note

Fiscal Note - SB 0628 - Statewide implementation of enhanced 911 (E911) service for cellular phones

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 2786-01

BILL NO. SB 628

SUBJECT: Telecommunications: Public Service Commission

TYPE: Original

DATE: January 21, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Wireless Service Provider Enhanced 911 Service*	$0	$0	$0
General Revenue	($92,232)	($18,000)	($18,000)
Total Estimated Net Effect on All State Funds	($92,232)	($18,000)	($18,000)

* Includes revenue and costs which net out to $0

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
None
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 6 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials of the Department of Economic Development, Office of the Public Counsel and the Public Service Commission assume this proposal would not fiscally impact their agencies.

The Department of Revenue (DOR) assumes this proposal would have a minimal impact on DOR and the provisions could be implemented utilizing existing staff and resources.

The State Treasurer's Office (STO) assumes this proposal would slightly increase the number of accounting transactions that are processed and would increase the funds available for investment. STO further assumes they would absorb any costs associated with this proposal through its current appropriation.

The Secretary of State (SOS) assumes there would be costs due to additional publishing duties related to the Wireless Service Provider Enhanced 911 Advisory Board's authority to promulgate rules, regulations, and forms. SOS estimates the board would promulgate 10 new pages of regulations in the Code of State Regulations at a cost of $20.00 per page, and 15 new pages in the Missouri Register at a cost of $22.00 per page. SOS further estimates distribution costs of $3 for the 25 pages for a total cost of $75. The actual fiscal impact would be dependent upon the actual rulemaking authority and may be more or less. For purpose of this fiscal note, SOS estimates costs at $605 in FY99. Financial impact in subsequent fiscal years would depend entirely on the number, length, and frequency of the rules filed, amended, or withdrawn. SOS does not anticipate the need for additional staff as a result of this proposal; however, the enactment of more than one similar proposal may, in the aggregate, necessitate additional staff.

Oversight assumes SOS could increase fees to cover additional costs, per Section 536.033 RSMo, and therefore, has not included these costs in the fiscal impact for this proposal. Oversight further assumes SOS would be required to certify the proposal to local election authorities for inclusion on the November 1998 general election ballot and to publish full text of the proposal in selected newspapers throughout the state. Costs are estimated at $1,330 per inch for 3 printings, or $3,990 per newspaper column inch. Oversight estimates 6 column inches would be needed for the publications at a total cost of $23,940.

The Department of Public Safety, Missouri Highway Patrol (MHP) assumes this proposal would increase the rates for all cellular and personal computer telephones by a maximum of $0.50 per month. MHP estimates that they have 175 telephones that would be affected and anticipate a fee increase of $0.50 per phone per month, at a total annual cost of $1,050. Oversight assumes the costs associated with these phones are included in the estimates of OA.

ASSUMPTION (continued)

The Office of Administration (OA), Division of Data Processing and Telecommunications states that this proposal establishes an implementation structure for FCC Order #94-102 which enhances 911 systems by providing location capabilities for wireless customers. If approved by voters, it authorizes the Commissioner of Administration to establish a $0.50 maximum fee per wireless telephone number per month to be collected by wireless service providers from their customers. OA estimates there are 900,000 wireless phones in the state, and a fee of $0.50 per phone per month would generate $5,400,000 in revenue annually to be deposited into the Wireless Service Provider Enhanced 911 Service fund after FY99. OA assumes that the earliest the wireless phone fees could be collected would be January 1, 1999. Given that as an effective date, fees would not be expected to be available until February, 1999, resulting in $2,250,000 in revenues during FY99. OA states that all revenues associated with this fee, other than the 5% allowed for administration costs and board expenses, would be used to subsidize local jurisdictions with wireless 911 emergency system implementations.

OA assumes an additional 4 FTE, plus related equipment and expenses and rental space, would be required to implement the provisions of this proposal. Oversight assumes these additional employees would be located in existing space and this proposal would not result in additional rental space. A telecommunications analyst IV ($48,180) would be needed to supervise the administration of the fund; a telecommunications analyst II ($35,016) would be needed to review applications from local jurisdictions for funding subsidies in implementing wireless 911 systems and to define and revise the funding distribution formula; and a clerk typist II ($18,024) would be needed to provide clerical support to the staff and board. OA further assumes that it would responsible for the audit process and would need an auditor II ($39,744) to audit the wireless service providers to ensure all fees are collected and transmitted to the Director of Revenue. The auditor would not be hired until FY2000. The costs of these FTE would be funded entirely by the Wireless Service Provider Enhanced 911 Service fund after February 1, 1999. However, due to an emergency clause in the proposal, OA assumes staff and equipment costs would be paid from General Revenue for the first seven months of FY99 until the wireless phone fees could be collected and used for administration.

OA also estimates there are 3,000 State of Missouri cordless phones. A monthly fee of $.50 per phone would result in annual costs of $18,000 per year, with the majority of that funded by General Revenue.

For purposes of this fiscal note, Oversight assumes the ballot measure concerning the $0.50 wireless phone fee would be approved at the November, 1998, election. If the measure is rejected, Oversight assumes this proposal would have no fiscal impact on OA. Oversight further assumes that FTE costs funded by General Revenue for the first seven months of FY99 would be ASSUMPTION (continued)

reimbursed by the Wireless Service Provider Enhanced 911 Service fund, up to the 5% maximum allowed. If $2,250,000 in fees is collected during FY99, than $112,500 would be

allowed for administrative costs and board expenses. Any amount over that would be funded by General Revenue.

FISCAL IMPACT - State Government FY 1999 FY 2000 FY 2001

(6 Mo.)

WIRELESS SERVICE PROVIDER

ENHANCED 911 SERVICE FUND

Revenue

Fees $2,250,000 $5,400,000 $5,400,000

Costs-Office of Administration

Personal Service (4 FTE) ($42,175) ($144,489) ($148,100)

Fringe Benefits ($11,822) ($40,500) ($41,512)

Expense and Equipment $0 ($33,012) ($27,212)

Transfer to G/R to cover

start-up costs of FTE ($58,503) $0 $0

Local Assistance ($2,137,500) ($5,181,999) ($5,183,176)

Total Costs-OA ($2,250,000) ($5,400,000) ($5,400,000)

ESTIMATED NET EFFECT ON

WIRELESS SERVICE PROVIDER

ENHANCED 911 SERVICE FUND $0 $0 $0

GENERAL REVENUE

Income-Office of Administration

Transfer from Wireless Service

Provider Enhanced 911

Provider Fund $58,503 $0 $0

Costs-Office of Administration

Personal Service (3 FTE) ($59,045) $0 $0

Fringe Benefits ($16,550) $0 $0

Expense and Equipment ($42,200) $0 $0

Total Costs-OA ($117,795) $0 $0

FISCAL IMPACT - State Government FY 1999 FY 2000 FY 2001

(6 Mo.)

Costs-Secretary of State

Newspaper advertisements ($23,940)

Agency Wireless Fees ($9,000) ($18,000) ($18,000)

ESTIMATED NET EFFECT ON

GENERAL REVENUE ($92,232) ($18,000) ($18,000)

FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(6 Mo.)
Income
Subsidies from Wireless Service
Provider Enhanced 911 Service Fund	$2,137,500	$5,181,999	$5,183,176
Costs
Costs to improve 911 wireless
telecommunications systems	($2,137,500)	($5,181,999)	($5,183,176)
ESTIMATED NET EFFECT
ON LOCAL FUNDS	$0	$0	$0
FISCAL IMPACT - Small Business

This proposal would have a fiscal impact on small businesses as it requires wireless service providers to collect a monthly fee and transmit it to the Director of Revenue.

DESCRIPTION

This proposal creates the Wireless Service Provider Enhanced 911 Advisory Board to advise the Office of Administration in implementing a Federal Communications Commission order that outlines requirements for wireless enhanced 911 service. It also creates the Wireless Service Provider Enhanced 911 Service Fund, and authorizes the Commissioner of the Office of Administration to establish a fee, if approved by voters, not to exceed 50 cents per wireless telephone number per month. Wireless service providers will collect the fee from wireless DESCRIPTION (continued)

service customers and remit the payments to the Department of Revenue for deposit into the fund.

This proposal authorizes the Office of Administration to administer and distribute the monies in the fund for approved expenditures and limits the amount they can retain for fund administration costs and actual and necessary expenses of the board to 5% of the monies in the fund. The Office of Administration is also required to review annually the distribution formula and adjust the fee within the limit of 50 cents per month. This proposal contains an emergency clause and requires the question of the fee to be submitted to the voters and approved before the Commissioner of the Office of Administration may establish a fee.

This legislation is not federally mandated; however, FCC Order #94-102 requires the state to make major improvements in the quality and reliability of 911 service available to the customers of wireless telecommunication providers. This legislation would not duplicate any other program, and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Department of Economic Development

Public Service Commission

Office of Public Counsel

Department of Public Safety

State Treasurer's Office

Department of Revenue

Office of Administration

Division of Data Processing and Telecommunications

Secretary of State

Jeanne Jarrett, CPA

Director

January 21, 1998