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Broadband bill passage a 'milestone' but funding questions remain

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MONTGOMERY — The Alabama Legislature gave final approval this week to a bill creating a new state authority to oversee the expansion of high-speed broadband internet services throughout the state.

There's no specific revenue stream for the effort that experts have said will take billions of dollars and, on Thursday evening, an expanded gambling proposal, part of which was intended to fund broadband, seemed to be stalled in the House.

But advocates say they expect significant federal funding in the near future. Rep. Randall Shedd, R-Cullman, has been pushing for expanded broadband coverage for years. He said the passage of Senate Bill 215 is great news for the state, even without any dedicated gambling revenue.

“Those of us that pushed for it, pushed for it with the understanding that there may not be any gambling money to go toward it,” said Shedd, who was opposed to expanding gambling in the state. “But (the bill) puts us in position to have a good statewide strategy for broadband expansion rather than a hodgepodge strategy.

“And secondly, it puts us in a better position to utilize the federal funds we think are coming for broadband.”

Sen. Del Marsh’s Senate Bill 215 was approved 29-0 in the Senate Tuesday and 89-0 in the House on Thursday. The bill creates an Alabama Digital Expansion Authority to oversee the expansion and availability. The authority within a year of the law’s passage must develop and begin executing a statewide connectivity plan, including a timeline for implementation.

Advocates for broadband expansion celebrated the bill's passage.

“Today marks a milestone for building a 21st century economy and education system in which all Alabamians, regardless of where they live, can thrive,” said Blake Hardwich of the Alabama Rural Broadband Coalition.

High-speed internet isn’t available in huge swaths of the state and Alabamians’ access to remote access to education, work and telehealth became a significant issue during the COVID-19 pandemic.

The bill establishes a grant program and creates the Alabama Digital Expansion Finance Corporation that could issue bonds of up to $250 million to finance eligible projects. The state currently funds $20 million per year to a broadband grant program, but some estimates put the cost of getting access across the state at $4-6 billion.

But even with a new authority and beefed up grant program, the state must somehow fund the initiative.

In his gambling bill, Marsh originally proposed directing $750 million in revenue from casino and sports betting toward broadband expansion. However, a newer version now being considered in the House removed that specificity and, instead, directs the Legislature to spend almost 50 percent of casino and sports book revenue toward “capital or other non-recurring expenses.”

That could mean broadband or other types of infrastructure — whatever the Legislature decides.

Gov. Kay Ivey's office, which was involved in drafting the new House gambling package, said writing specific earmarks for broadband into the constitution would cause problems down the road when needs change.

"Governor Ivey believes it would be unwise to tie the state’s hands when it is hard to anticipate future needs in the next 10, 20 years and beyond," said Press Secretary Gina Maiola. "The goal in the allocation formula is to make it as flexible as possible so that the state of Alabama can continue to benefit years from now, as needs change, technology develops and things evolve.

"If the Legislature decided that they wanted to put money toward broadband down the road, Governor Ivey would fully support that."

Rep. Danny Garrett, R-Trussville, who carried the broadband bill in the House, told ADN that as of Thursday afternoon the only certain funding stream for the plan was incoming funds from the federal American Rescue Act Plan passed by Congress in March.

"There is potentially a significant portion of the funds coming to Alabama from that act that could be used for broadband," Garrett said.

The Alabama Department of Finance previously told ADN that Alabama would receive about $4.043 billion from the American Rescue Plan Act, of which:

— $2.1 billion is earmarked for a state relief fund;

— $192 million will go toward a state capital projects fund;

— $417 million will go to metropolitan cities;

— $362 million will go to non-county municipalities; and

— $951 million will go to counties.

Besides the Rescue Plan money, Shedd said there’s a general interest at the federal level for broadband. Meanwhile, Congressman Robert Aderholt has championed expansion to rural areas. As federal earmarks return, Shedd said that could direct additional money to expansion here.

“I think I can say we all expect a lot of federal funds coming down the pike,” Shedd said. “And we may find other state funds.”

The bill allows the authority to collect funds from various outside sources.