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House Bill 490 — Municipal communications services

House Bill 490 — Municipal communications services

Lindsay Atkinson
February 19, 2020

Bill description: HB 490 would allow cities to create municipal broadband, cable, and telephone service enterprises. 

Rating: -3

Does it transfer a function of the private sector to the government? Examples include government ownership or control of any providers of goods or services such as the Land Board's purchase of a self-storage facility, mandatory emissions testing, or pre-kindergarten. Conversely, does it eliminate a function of government or return a function of government to the private sector? 

HB 490 would transfer a function of the private sector to the government by granting cities the authority to establish communications networks and services, which the private sector already offers. Communications services include cable, broadband, satellite, and telecommunication services.

In the bill’s statement of purpose, the sponsor specifically writes that the goal of this legislation is to allow “cities and private industry communications service providers a fair and level competitive playing field.” The bill thus implies that it is a role of the government to use taxpayer dollars to compete with the private sector to provide communications services.


Does it create, expand, or enlarge any agency, board, program, function, or activity of government? Conversely, does it eliminate or curtail the size or scope of government? 

HB 490 largely expands the function of cities by stating that “[a] city shall have the authority to establish, create, develop, acquire, finance, construct, equip, lease, own, maintain, and operate a communications network and offer communications service within the corporate limits of the city.” A city could use this authority in several ways. Through the language of this bill, a city could fund its own, public communications network. Or, a city could finance the creation of a new private network, pay to equip an existing private business, lease a private business, or otherwise subsidize a communications service provider in the private sector. 


Does it increase government spending (for objectionable purposes) or debt? Conversely, does it decrease government spending or debt? 

This bill establishes that cities would have to fund their communications service network through “a separate enterprise fund for the provision of communications service.” But it is reasonable to assume that any city that pursues a public communications service network will have startup costs. And these startup costs would not be funded by a communications enterprise fund, but instead by taxpayer dollars.

The bill directs cities that offer communication services to “annually remit to the general fund of the city an amount equivalent to all local taxes or fees a private communications service provider would be required to pay the city and the county in which the city is located.” This could be how a city’s broadband enterprise later repays for its startup costs, but it is likely taxpayers would foot the bill for starting a communications network. 

The bill does state that a city cannot form a local improvement district to fund the startup of a communications service network, shutting off one objectionable method of funding city-owned broadband. But it would still be objectionable to use taxpayer dollars in starting a public communications services business. Some of those taxpayer dollars might be coming from existing, private communications service providers that, through this bill, would be forced to fund their own competition through city taxation.


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