July 27, 2009

To WSTA Members:

On Monday, June 29, 2009, Gov. Jim Doyle signed the 2009-2011 biennial budget into law as Wisconsin Act 28.  Gov. Doyle, who signed the budget at the governor's mansion in Maple Bluff, has one of the most powerful veto pens in the country, which allows him to approve spending bills while rewriting portions of them.  Gov. Doyle's 81 vetoes are expected to stand.  The budget closes a record $6.6  billion shortfall over two years by raising $2.1 billion in taxes and fees, spending federal economic stimulus money, cutting state agency spending, and reducing aid to local governments and schools.  Tax increases include: $310 million by raising the $1.77-per-pack cigarette tax to $2.52; $287 million by creating a new, 7.75% income tax bracket for the wealthiest taxpayers; $242 million by cutting in half the tax exemption for capital-gains investments; and $105 million with a 75-cent monthly fee on telephone lines that will start September 1, 2009.  Gov. Doyle's actions completed the budget before the start of the fiscal year on July 1, 2009.  It's the first time Wisconsin has accomplished that since 1977.  No Republican legislator voted for the budget, saying it was too costly at a time of economic distress.  The following provides a summary of the telecommunications-related provisions contained in WI Act 28:


POLICE AND FIRE PROTECTION FEE

Impose a police and fire protection fee equal to seventy-five cents per month on each active voice and non-voice communications service connection, but exclude prepaid wireless telecommunications plans from the fee.  Extend a police and fire protection fee on prepaid wireless telecommunications plans equal to one-half of the fee imposed on other types of service connections, as described above, on each retail transaction, and require the seller to collect the fee from the buyer with respect to each transaction occurring in the state.  Allow providers and retailers to list the fee separately on subscribers' bills.  Impose each fee beginning on September 1, 2009.

Require subscribers to pay the fee to the provider or retailer and require the provider or retailer to remit the fee to the PSC by the end of the calendar month following the month the provider or retailer received the fee from the subscriber.  Specify that the fee would not be included in calculating state or local sales taxes.  Authorize the PSC to administer the fee, and specify that the Commission is authorized to promulgate rules, commence collection actions, and contract with the Department of Revenue (DOR) for the collection of fees from retailers.  Authorize 1.0 FTE position and provide $166,600 SEG annually to the PSC.  Create a SEG fund called the police and fire protection fund and deposit revenues from the fee in the fund.  Estimate state revenues from the fee at $46,400,000 in 2009-10 and $61,200,000 in 2010-11.  Transfer $46,233,400 in 2009-10 and $61,033,400 in 2010-11 from the police and fire protection fund to the general fund for the purpose of making payments under the county and municipal aid program.


POLICE AND FIRE PROTECTION FEE MODIFICATIONS

For purposes of the police and fire protection fee created above, modify the definition of communications service to include only active retail voice communications service.  This would have the effect of excluding both non-retail and nonvoice communications from the definition.  Modify the fee's imposition provision pertaining to the 75 cent per month fee to specify that the fee would be imposed on each communications service connection with an assigned telephone number, including a communication service provided via a voice over Internet protocol connection, and specify that if a communications provider provides multiple communications service connections to a subscriber, the communications provider shall impose a separate fee on each of the first 10 connections and one additional fee for each 10 additional connections per billed account.

Modify the provision that allows a provider to list the fee separately from other charges on a subscriber's bill to also allow a provider to combine the fee with the charge authorized under current law provisions for 911 services if the provider identifies the combined fee and charge as "charge for funding countywide 911 systems plus police and fire protection fee."


TELECOMMUNICATIONS ASSESSMENTS FOR CONSUMER PROTECTION

Require the PSC to annually assess against telecommunications utilities (wireless and wireline), in proportion to their gross operating revenues during the last year, the total amount appropriated to the Department of Agriculture, Trade, and Consumer Protection (DATCP) for consumer protection functions related to telecommunications services ($415,800 annually in 2009-10 and 2010-11).  Create a PR appropriation to fund the related DATCP operations and credit revenues from assessments to the appropriation.

Require telecommunications utilities to pay the assessments within 30 days after the Commission mails bills for the assessments, and provide that bills constitute notice of assessments and demand for payment.  Prohibit telecommunications utilities from recovering the assessments through a separate line on billing statements to their customers.  Extend current law provisions regarding payment of Commission expenditures to the assessments.


DISBURSEMENT OF WIRELESS 911 FUND BALANCE

Prohibit the PSC from making distributions from the wireless 911 fund to any person, except for grants and supplemental grants authorized under current law provisions.  The wireless 911 fund was created in 2003 on a temporary basis.  Surcharges on customers' wireless telecommunications bills were deposited in the fund and used to provide grants to local governments and wireless providers as reimbursement for costs incurred in establishing a system for responding to wireless emergency 911 telephone calls.  Surcharges were imposed between December 1, 2005, and July 1, 2008, and state law sunsets the grants and other program expenditures on April 1, 2009.  Based on an administrative rule, the PSC intended to distribute the closing balance in the fund to wireless providers for redistribution to consumers.  Instead, the bill transfers the fund balance ($20,340,000) to the general fund to supplement funding for aid payments under the county and municipal aid program.  This provision would prohibit the PSC distribution to wireless providers, as required by rule.


PUBLIC LIBRARY SYSTEM AID

Delete $11,297,400 GPR annually and provide $11,541,100 SEG in 2009-10 and $12,056,900 SEG in 2010-11 for aid to public library systems.  Also, repeal the GPR appropriation for library aids.  Base level funding is $11,297,400 GPR and $5,486,100 SEG, for a total of $16,783,500 all funds.  The recommendation would result in library funding of $17,027,200 SEG in 2009-10 and $17,543,000 SEG in 2010-11, or net increases of $243,700 in 2009-10 and $759,500 in 2010-11.  These funding levels would represent annual increases of 1.5% in 2009-10 and 3.0% in 2010-11.

Provide that, for the 2009-10 fiscal year, library aids will be calculated based on the percentage change in the total amount appropriated in both the GPR and SEG appropriations in 2008-09 and the amount appropriated in the SEG appropriation in 2009-10.  Under current law, aid is calculated based on the percentage change in the GPR appropriation for public library aids between the prior fiscal year and current fiscal year.  The segregated funding is provided from the state universal service fund, which receives its funding through assessments on annual gross operating revenues from intrastate telecommunications providers.  Telecommunications providers are allowed to fully recover their share of assessment costs for these expenditures through a "pass-through" adjustment applied only to subscribers' local exchange service rates.


LIBRARY SERVICE CONTRACTS

Delete $1,097,200 GPR annually and provide $1,134,300 SEG in 2009-10 and $1,169,800 SEG in 2010-11 in a newly created appropriation for contracts with four providers of specialized statewide library services and resources.  The recommendation would provide net increases of $37,100 in 2009-10 and $72,600 in 2010-11, to partially fund estimated costs to continue current services.  These funding amounts would represent annual increases of 3.4% in 2009-10 and 3.1% in 2010-11.  Provide that these library service contracts be added to the statutorily enumerated permissible uses for universal service fund revenues.

Contracts are currently maintained with the Milwaukee Public Library, Wisconsin Library Services, the Wisconsin Regional Library for the Blind and Physically Handicapped, and the Cooperative Children's Book Center.  The segregated funding is provided from the state universal service fund, which receives its funding through assessments on annual gross operating revenues from intrastate telecommunications providers.  Telecommunications providers are allowed to fully recover their share of assessment costs for these expenditures through a "pass-through" adjustment applied only to subscribers' local exchange service rates.


BADGERLINK

Provide $235,900 in 2009-10 and $446,300 in 2010-11 above base level funding of $2,111,000 for full-text data base services for libraries.  The administration indicates that is funding would continue the current level of services.  Funding for the program is provided through the segregated universal service fund, which receives its funding through assessments on annual gross operating revenues from intrastate telecommunications providers.  Telecommunications providers are allowed to fully recover their share of assessment costs for these expenditures through a "pass-through" adjustment applied only to subscribers' local exchange service rates.


NOTE: WI Act 28 authorizes total USF assessments of $44,673,700 in 2009-10, and $45,440,100 in 2010-11.  Total USF assessments were budgeted at $32,038,400 in 2008-09.  Assuming uniform pass through of all assessments to customers, current USF assessments average 86 cents per month for wireline customers.  Despite the overall increase in the level of USF assessments, by WI Act 28 extending the DATCP and USF assessments to wireline and wireless providers, charges to customers should average roughly 68 cents per month and 56 cents per month, respectively, assuming the assessments' uniform pass-through to all customers.


TEACH DATA LINE ACCESS FOR BUSINESS

Delete reference to data line access between educational agencies and business entities to clarify that business access to data lines would be limited to connectivity through the Internet and that the transmission over data lines is limited to transmissions that originate or terminate at the site of an educational agency or governmental entity that is authorized to use the data line.


Specifically, as it relates to the police and fire protection fee, WSTA staff (and others) continue to work with the Public Service Commission (PSC) and Department of Revenue (DOR) to address a number of important unanswered questions as it relates to the implementation process.  As such, we will continue to provide WSTA members updated information, as necessary.  In the meantime, please don’t hesitate to contact me directly with further questions or concerns.  Thanks!


Chris LaRowe
WSTA
Manager of External Affairs
(608) 256-8866 ext 20