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Current Status Bill Number:View additional legislative information at the LPITS web site.329 Type of Legislation:General Bill GB Introducing Body:Senate Introduced Date:19990114 Primary Sponsor:Moore All Sponsors:Moore, McConnell, Russell, McGill, Passailaigue, Reese, Jackson, Martin, Washington, Saleeby Drafted Document Number:l:\council\bills\gjk\20131sd99.doc Companion Bill Number:3276 Residing Body:Senate Current Committee:Judiciary Committee 11 SJ Subject:Telecommunications providers, municipal corporation charges to; Public Service, Political Subdivisions History Body Date Action Description Com Leg Involved ______ ________ ______________________________________ _______ ____________ Senate 19990624 Recommitted to Committee 11 SJ Senate 19990330 Read second time, ordered to third reading with notice of general amendments, carrying over all amendments to third reading Senate 19990217 Committee report: Favorable 11 SJ Senate 19990114 Introduced, read first time, 11 SJ referred to Committee Versions of This Bill Revised on February 17, 1999 - Word format
COMMITTEE REPORT
February 17, 1999
S. 329
Introduced by Senators Moore, McConnell, Russell, McGill, Passailaigue, Reese, Jackson, Martin, Washington and Saleeby
S. Printed 2/17/99--S.
Read the first time January 14, 1999.
To whom was referred a Bill (S. 329), to amend Chapter 9 of Title 58, Code of Laws of South Carolina, 1976, relating to telephone, telegraph, and express companies, etc., respectfully
That they have duly and carefully considered the same, and recommend that the same do pass:
THOMAS L. MOORE, for Committee.
REVENUE IMPACT 1/
This bill has no impact on state revenues. Local revenues, specifically municipal revenues, would decrease by approximately $8,000,000 in the first year. In succeeding years, the revenue loss to municipalities would decrease slightly due to growth in gross revenues for the telecommunications companies. If the municipalities shifted this $8,000,000 loss to property taxes, the average city millage would increase by an estimated 1.6 mills or 2.2%.
Explanation
Data from the Municipal Association of South Carolina showed that currently municipalities are receiving approximately $11,000,000 in franchise fees and business license taxes from telecommunications companies. Franchise fees are negotiated between the company and the municipality and generally range up to 3% of local recurring revenue. Currently, the business license tax is collected from telecommunication companies on gross receipts at a rate of 3% in most municipalities that collect a business license tax. More than three quarters of the $11,000,000 is accounted for by franchise fees. Local recurring revenue basically amounts to what a customer pays just for having a phone and not long distance calls and other additional services. This bill would eliminate franchise fees and cap business license taxes at the rate of 0.2%, and expand the tax base to incorporate gross income derived from the sale of retail telecommunications services. Gross income would include local recurring revenue as well as all services such as long distance, measured service charges, one time, non-recurring charges, equipment charges and any other form of revenue derived from the use of the phone. Applying the 0.2% rate to the gross revenue would generate about $3,000,000 of revenue. This bill would therefore result in an approximate loss of $8,000,000 for the municipalities.
This bill would also allow the municipalities to collect a permit fee in an amount directly related to the municipalities rights-of-way management costs associated with the telecommunications company's use of the public rights-of-way. The permit fee shall not exceed $25 for each permit issued to any telecommunications company and is expected to generate less than $100,000.
Approved By:
William C. Gillespie
Board of Economic Advisors
1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact, Section 2-7-76 for a local revenue impact, and Section 6-1-85(B) for an estimate of the shift in local property tax incidence.
TO AMEND CHAPTER 9 OF TITLE 58, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO TELEPHONE, TELEGRAPH, AND EXPRESS COMPANIES, BY ADDING ARTICLE 20 SO AS TO PROVIDE FOR THE MANNER IN WHICH AND CONDITIONS UNDER WHICH AMOUNTS MAY BE CHARGED BY MUNICIPALITIES TO TELECOMMUNICATIONS COMPANIES FOR THE USE OF THE PUBLIC RIGHTS-OF-WAY AND FOR BUSINESS LICENSE TAXES IN ORDER TO ENSURE THAT SUCH CHARGES ARE IMPOSED ON A COMPETITIVELY NEUTRAL AND NONDISCRIMINATORY BASIS, TO LIMIT OR RESTRICT THE IMPOSITION OF CERTAIN OTHER FEES AND TAXES ON TELECOMMUNICATIONS COMPANIES BY MUNICIPALITIES; AND TO PROVIDE FOR RELATED PROCEDURAL AND OTHER MATTERS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Chapter 9 of Title 58 of the 1976 Code is amended by adding:
Section 58-9-2200. As used in this article:
(1) 'Telecommunications service' means the provision, transmission, conveyance, or routing for a consideration of voice, data, video, or any other information or signals of the purchaser's choosing to a point, or between or among points, specified by the purchaser, by or through any electronic, radio, or similar medium or method now in existence or hereafter devised. The term 'telecommunications service' includes, but is not limited to, local telephone services, toll telephone services, telegraph services, teletypewriter services, teleconferencing services, private line services, channel services, internet protocol telephony, and mobile telecommunications services.
(2) 'Retail telecommunications service' includes telecommunications services as defined in item (1) of this section but shall not include:
(a) telecommunications services which are used as a component part of a telecommunications service, are integrated into a telecommunications service, or are otherwise resold by another provider to the ultimate retail purchaser who originates or terminates the end-to-end communication including, but not limited to, the following:
( i) carrier access charges;
(ii) right of access charges;
(iii) interconnection charges paid by the providers of mobile telecommunications services or other telecommunications services;
(iv) charges paid by cable service providers for the transmission by another telecommunications provider of video or other programming;
( v) charges for the sale of unbundled network elements; and
(vi) charges for the use of intercompany facilities;
(b) information and data services including the storage of data or information for subsequent retrieval, the retrieval of data or information, or the processing, or reception and processing, of data or information intended to change its form or content;
(c) cable services that are subject to franchise fees defined and regulated under 47 U.S.C Section 542;
(d) satellite broadcast services.
(3) 'Telecommunications company' means a provider of one or more telecommunications services.
(4) 'Cable service' includes, but is not limited to, the provision of video programming or other programming service to purchasers, and the purchaser interaction, if any, required for the selection or use of the video programming or other programming service, regardless of whether the programming is transmitted over facilities owned or operated by the cable service provider or over facilities owned or operated by one or more other telecommunications service providers.
(5) 'Mobile telecommunications service' includes, but is not limited to, any one-way or two-way radio communication service carried on between mobile stations or receivers and land stations and by mobile stations communicating among themselves, through cellular telecommunications services, personal communications services, paging services, specialized mobile radio services and any other form of mobile one-way or two-way communications service.
(6) 'Service address' means the location of the telecommunications equipment from which telecommunications services are originated or at which telecommunications services are received by a retail customer. If this is not a defined location, as in the case of mobile phones, paging systems, maritime systems, and the like, 'service address' means the location of the retail customer's primary use of the telecommunications equipment or the billing address as provided by the customer to the service provider. If the location of the retail customer's primary use of the telecommunications equipment or the billing address is not within the licensed provider's service area, 'service address' shall mean the location of the switch. In the case of prepaid communications, the service address to which the telecommunications service is charged is considered to be the location from which the communication is originated.
(7) 'Bad debt' means any portion of a debt that is related to a sale of telecommunications services and which has become worthless or uncollectable, as determined under applicable federal income tax standards.
(8) 'Municipality's rights-of-way management costs' means the actual costs a municipality incurs in managing its public rights-of-way used by telecommunications companies, and includes the costs, if incurred of:
(a) registering telecommunications company permit applicants;
(b) issuing and processing rights-of-way construction permit applications filed by telecommunications companies;
(c) inspecting job sites and restoration projects of telecommunications companies;
(d) determining the adequacy of rights-of-way restoration undertaken by telecommunications companies; and
(e) revoking rights-of-way construction permits issued to telecommunications companies.
Section 58-9-2210. (A) If a municipality requires a fee to be paid by a telecommunications company for its use of the public rights-of-way pursuant to Section 5-7-30 or other authority, the fee must be limited to a permit fee in an amount directly related to the municipality's rights-of-way management costs associated with the telecommunications company's use of the public rights-of-way. Rights-of-way management costs shall not include any depreciation or repair costs and shall not exceed twenty-five dollars for each permit issued to any telecommunications company.
(B) Nothing in this section shall limit a municipality's authority to enter into and charge for franchise agreements with respect to cable services as governed by 47 U.S.C. Section 452.
Section 58-9-2220. (A) In any dispute over the amount of a permit fee charged by a municipality pursuant to Section 58-9-2210, the municipality shall have the burden of proving that the permit fee is directly related to its rights-of-way management costs and that the fee is assessed in a competitively neutral and nondiscriminatory manner. Where the charge is less than five dollars for each permit issued, it shall be conclusively presumed that the fee is directly related to the costs.
(B) A telecommunications company shall not be required to pay a permit fee for the use of public rights-of-way unless it actually owns or controls poles, wires, or other structures located in the public rights-of-way. A telecommunications company shall not be considered as owning or controlling facilities in the public rights-of-way solely as a result of:
(1) reselling the services of another telecommunications company that occupies the public rights-of-way;
(2) purchasing or leasing unbundled network elements or facilities from a person that occupies the public rights-of-way; or
(3) transmitting radio communications in the airways above the public rights-of-way.
(C) A municipality shall not require or solicit in-kind payment of services or facilities in lieu of any permit fees charged for use of the public rights-of-way. Nothing in this section shall impair any ordinance or agreement in effect on the effective date of this article which provides or allows in-kind compensation by a telecommunications company.
(D) No telecommunications company shall install or construct facilities in the public rights-of-way unless authorized by a written permit issued by a municipality. The permit may require the permit holder to be responsible for any damage resulting from issuance of the permit or injury from the installation or construction of the facilities. Permits may not be required for repairs or other minor activities such as opening manhole covers, digging postholes, or other insignificant activity that does not require a significant obstruction or redirection of pedestrian or vehicular traffic.
Section 58-9-2230. Notwithstanding any provision of law to the contrary:
(1) A business license tax levied by a municipality upon a telecommunications company or upon a telecommunications company's lines of business shall not exceed two-tenths of one percent of the gross income derived from the sale of retail telecommunications services for the preceding calendar or fiscal year which either originate or terminate in the municipality and which are charged to a service address in the municipality, regardless of where these amounts are billed or paid. For a business in operation for less than one year, the amount of business license tax authorized by this section must be computed based on a twelve-month projected income.
(2) A business license tax levied by a municipality upon a telecommunications company or upon a telecommunications company's lines of business may not exceed in the aggregate the average effective tax rate applied to other general retail businesses doing business within the boundaries of the municipality, but in no event shall a business license tax levied by a municipality upon a telecommunications company exceed the business license rate imposed in item (1) of this section. To determine the average effective tax rate, the aggregate amount of tax paid shall be divided by the aggregate revenues of the other business license taxpayers.
(3) A business license tax levied by a municipality upon the retail telecommunications services provided by a telecommunications company or upon a telecommunications company's lines of business must be levied in a competitively neutral and nondiscriminatory manner upon all providers of retail telecommunications services.
(4) A municipality is responsible for maintaining adequate records to demonstrate that the business license tax rate assessed on a telecommunications company complies with items (2) and (3) of this section.
(5) A business license tax shall apply to retail telecommunications services only as defined in this article.
(6) The measurement of the amounts derived from the retail sale of telecommunications services shall not include:
(a) an excise tax, sales tax, or similar tax, fee, or assessment levied by the United States or any state or local government including, but not limited to, emergency telephone surcharges, upon the purchase, sale, use, or consumption of a telecommunications service, which is permitted or required to be added to the purchase price of the service; and
(b) bad debts.
(7) The measurement of the amounts derived from the retail sale of mobile telecommunications services shall include only revenues from the monthly basic service charge of customers whose service address is within the boundaries of the municipality.
(8) A business license tax levied by a municipality upon a telecommunications company or upon a telecommunications company's lines of business must be reported and remitted on an annual basis.
Section 58-9-2240. Other than (1) the permit fee imposed in Section 58-9-2210, (2) the business license tax authorized in Section 58-9-2220, (3) ad valorem property taxes, and (4) franchise fees as defined and regulated under 47 U.S.C. Section 542:
(1) no municipality shall levy any tax, license, fee, or other assessment on, with respect to, or measured by the receipts from any telecommunications service, or on telecommunications companies;
(2) no municipality shall require any provider of telecommunications services to enter into or extend the term of a franchise or other agreement which requires the payment of a franchise fee;
(3) no municipality shall enforce any provision of any ordinance or agreement to the extent that the provision obligates a provider of telecommunications services to pay to the municipality a franchise fee or any other tax, license, or fee that is not also applicable to general business activities in this State.
Section 58-9-2250. (A) All aspects of a municipality's management of the public rights-of-way including without limitation the granting or denial of construction permits, the time periods for approving the permits, and the assessment of a fee for use of the public rights-of-way shall be competitively neutral and nondiscriminatory.
(B) A municipality shall grant or deny all permit applications issued pursuant to Section 58-9-2210 within thirty days of receipt of a completed application.
(C) A municipality shall grant or deny a permit application within the prescribed time regardless of whether a charge permitted pursuant to Section 58-9-2210 has been agreed upon between a municipality and a telecommunications company.
Section 58-9-2260. A municipality may not use its authority over the public rights-of-way as a basis for asserting or exercising regulatory control over telecommunications companies regarding matters within the jurisdiction of the Public Service Commission or the Federal Communications Commission including, but not limited to, the operations, systems, service quality, service territory, and prices of a telecommunications company. Nothing in this section shall be construed to limit the authority of a local governmental entity over a cable television company providing cable service as permitted by 47 U.S.C. Section 542.
Section 58-9-2270. A telecommunications company that has obtained permission to occupy the public rights-of-way of a municipality or is otherwise lawfully occupying the public rights-of-way of a municipality on the effective date of this article is not required to obtain additional consent to continue the lawful occupation of those public rights-of-way. In addition, nothing in this section shall affect any existing agreement between a municipality and a telecommunications company for the use of the public rights-of-way that is in effect as of the date of the effective date of this article.
Section 58-8-2280. (A) Each municipality shall maintain a notification registry, which shall include the name, mailing address, and telephone number of a telecommunications company providing a written request to be placed on the registry. The municipality shall notify in writing all telecommunications companies listed on the registry of a law or ordinance, or hearings on a law or ordinance, which would impose a business license tax or fee, or increase an existing business license tax, fee, or requirements, on telecommunications companies.
(B) A law or ordinance which imposes a business license tax or fee, or increases an existing business license tax, fee, or requirements on telecommunications companies shall not be effective before one hundred twenty days of the date of its enactment or adoption.
Section 58-9-2290. Except as otherwise expressly provided, nothing in this article shall be construed as limiting the existing police powers of a municipality. In addition and except as otherwise expressly provided, this article shall not limit or expand whatever powers municipalities may have relating to public rights-of-way and business license taxes."
SECTION 2. If a section, paragraph, provision, or portion of this act is held to be unconstitutional or invalid by a court of competent jurisdiction, this holding shall not affect the constitutionality or validity of the remaining portions of this act, and the General Assembly for this purpose hereby declares that the provisions of this act are severable from each other.
SECTION 3. The provisions of this act shall preempt and void any existing or future municipal ordinances inconsistent with the provisions hereof; provided, that ordinances adopted solely to ratify agreements previously entered into by a telecommunications company and a municipality may continue in effect upon agreement of the parties but not beyond the earliest date upon which the agreement would have expired by its terms.
SECTION 4. This act takes effect upon approval by the Governor.
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