Tax credit proposed to aid rural broadband

Tax credit proposed to aid rural broadband
major concern for state lawmakers, industry members and rural counties has been improving rural broadband access for underserved communities that also struggle with economic hardship. HB 2749 would allow local governments to impose a .005 sales tax credit to fund broadband infrastructure. Photo: openclipart.org

One Washington telecom provider wants all state residents to have high-speed internet access by 2028. It’s a goal driven primarily by uneven broadband access, which creates a divide between rural and urban Washingtonians – a problem that state lawmakers, industry members and local governments have sought to change in recent legislative session.

A new bill seeks to reduce that figure by allowing rural counties to tack on an extra sales tax in order to fund infrastructure in areas currently beyond the reach of broadband providers.

Rep. Ed Orcutt (R-20) is the prime sponsor of HB 2749. At a January 23 public hearing of the House Committee on Technology & Economic Development, he told panel members that while many residents in his district have internet, it’s not sufficient speed for any practical use. “You can tell when the kids get on to do their homework.”

“Those who really need the economic development need to break away from their long commutes into town,” he added. “When you’re starting up, you can’t afford to pay rent or to buy an office in town, so you have to work out of your home, and if they don’t have broadband or decent internet access in their home it’s very difficult to start a business.”

Orcutt’s observations match the findings of the Federal Communication Commission’s 2016 Broadband Progress Report, which found counties such as Lewis and Cowlitz have disproportionately higher underserved communities. Approximately 200,000 Washingtonians do not have high-speed internet, but nearly all of them are in rural areas.

One of the challenges of extending internet access to these areas has been the cost involved to expand the infrastructure far enough to reach those residents. “I think we’ve got a good proposal here that will help actually accomplish that objective…that last mile where it’s really needed,” Orcutt said. “I want to get the infrastructure out there, because that’s the biggest barrier right now.”

If passed, the bill would allow qualifying counties to impose a .05 sales and use tax as a credit against the statewide sales tax. That revenue could only go to the development of high-speed internet infrastructure. The proposal defines a rural county as one that has a population density of fewer than 100 people per square mile – or that the county is smaller than 225 square miles.

The legislation drew questions from Chair Jeff Morris (D-40) as to why the legislation didn’t encourage local public-private partnerships. As written, the bill would ultimately divert state sales tax revenue coming from these counties in order to fund the infrastructure projects.

Orcutt explained that these counties can’t afford it. “If they did, we could supplement it that way.  Some are still using their reserves even this long after the Great Recession. It’s a very big struggle for those counties, and that’s why this approach is so important.”

In support is the Association of Washington Business (AWB), the state’s oldest and largest statewide business association with 8,000 members. Government Affairs Director Mike Ennis told panel members: “It’s sometimes hard to bring telecoms and our members together on broadband issues. We believe this bill does it.

“You cannot have a conversation on rural jobs without a focus on rural broadband,” he added. “Washington state rural areas have struggled to keep pace in many key economic measures…when compared to urban centers around the Puget Sound. It has become such a pervasive and necessary component of our lives that those without it risk getting left behind.”

HB 2749’s public hearing coincided with a work session in the Senate Economic Development & International Trade Committee also discussing rural broadband for communities in Eastern Washington counties such as Lincoln, which has only 10,000 residents and a density of 4.6 people per acre.

One potential option to achieve these goals is through the Spokane-based wholesale telecommunications provider Northwest Open Access Network (NoaNet), which in 2012 built a fiber optics network in Lincoln. The organization’s goal is for all Washingtonians to have high-speed internet by 2028. In those areas, public utility districts have also combined their networks using the Bonneville Power Administration public-purpose fiber.

NoaNet Outreach and Communications Director Angela Bennink told panel members that thegoal is to have high-speed internet for all Washingtonians by 2028. “Truly our vision is to provide these services and bridge the digital divide between rural and urban areas.”

HB 2749 is scheduled for committee action on February 1.

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