State Fiscal Highlights

STATE FUND	FY 2002	FY 2003			FUTURE YEARS
General Revenue Fund
Revenues	- 0 -		Potential minimal loss	Potential loss up to $9.5 million
Expenditures	- 0 -		Potential minimal increase	Potential minimal increase
Reparations Fund (Fund 402)
Revenues	Potential minimal gain		Potential minimal gain	Potential minimal gain
Expenditures	- 0 -		- 0 -	- 0 -

Note: The state fiscal year is July 1 through June 30. For example, FY 2002 is July 1, 2001 – June 30, 2002.

· The bill permits a tax credit against the public utility excise tax for a wireline telephone company to recover its costs of equipping a 911 public safety answering point to allow for enhanced wireless 911 service. The tax credit could result in a loss of revenue up to $10 million in fiscal years 2004 through 2006, with smaller revenue losses before and after those years. A revenue loss of $10 million under this tax would cost the GRF about $9.5 million.

· The bill creates the Enhanced Wireless 911 Government Assistance Fund in the State Treasury. It specifies that the fund is for the purpose of aiding local governments financially to upgrade 911 PSAPs to accommodate enhanced wireless 911 service, but the bill does not provide a revenue source for the new fund. Possible revenue sources should be identified by the newly-created Ohio 911 Council in a report to the General Assembly due July 1, 2002.

· As a result of the penalty enhancement for misuse of 911 services, additional revenue may be generated for the Reparations Fund (Fund 402), as repeat offenders who may have been initially convicted of a misdemeanor will be convicted of a fourth degree felony under the bill. Currently state court costs in misdemeanor cases are $20 with $11 and $9 going to the GRF and Reparations Fund (Fund 402) respectively. State court costs in felony cases are $41 with $11 and $30 going to the GRF and Reparations Fund (Fund 402) respectively.

· The Department of Rehabilitation and Correction’s annual GRF-funded incarceration and post-release supervision costs may rise as a result of the bill’s penalty enhancement provision, but that increase would be minimal as the number of affected offenders will be extremely small.

Local Fiscal Highlights

LOCAL GOVERNMENT		FY 2002		FY 2003		FUTURE YEARS
Counties, Municipalities, and Townships (LGF & LGRAF)
Revenues	- 0 -		Potential minimal loss		Potential loss up to $480,000
Expenditures	- 0 -		- 0 -		- 0 -
Counties, Municipalities
Revenues	Potential minimal gain or loss		Potential minimal gain or loss		Potential minimal gain or loss
Expenditures	Potential minimal increase		Potential minimal increase		Potential minimal increase

Note: For most local governments, the fiscal year is the calendar year. The school district fiscal year is July 1 through June 30.

· The bill permits a tax credit against the public utility excise tax for a wireline telephone company to recover its costs of equipping a 911 public safety answering point to allow for enhanced wireless 911 service. The tax credit could result in a loss of revenue up to $480,000 in fiscal years 2004 through 2006 to the Local Government Fund and the Local Government Revenue Assistance Fund, with smaller revenue losses before and after those years. The local government fund freeze limits revenue loss in FY 2003 to the second half of calendar year 2003.

· The bill prohibits knowingly using 911 service for a purpose other than obtaining emergency service, declares a first offense to be a misdemeanor of the fourth degree, and declares subsequent offenses to be felonies of the fifth degree. Such offenses may currently be charged as causing a false alarm under municipal ordinances or section 2917.32 of the Revised Code, a first degree misdemeanor in either case. The increase in specificity of the statute, together with the reduction in penalty from a first degree misdemeanor to a fourth degree misdemeanor will likely increase caseloads, but decrease the penalty accompanying a conviction, with offsetting effects on revenues. Convictions for subsequent offenses would carry a greater penalty than currently would be incurred.

· Counties will potentially see an increase in revenues from repeat offenders paying the higher fines associated with felony level offenses. Also, counties will receive local court costs since felonies are handled in the county operated courts of common pleas. However, the expenditures for prosecuting and possibly defending and sanctioning a person charged and convicted with a felony are higher than those for a misdemeanant.

· Municipalities will potentially have a decrease in revenues generated from local court costs, but will also have lower expenditures as former misdemeanants are adjudicated as felons in the courts of common pleas.

Detailed Fiscal Analysis

S.B. 181 would require that a wireless telephone company in Ohio provide enhanced wireless 911 service upon the request of a public safety answering point (PSAP), and would allow such companies to indicate on customers’ bills the cost of complying with this requirement. The bill would require wireline telephone companies to provide any necessary infrastructure to support enhanced wireless 911 service at the request of a PSAP, and would allow such companies to employ an existing tax credit against the public utility excise tax to recover their costs associated with upgrading equipment if necessary to support the provision of such service.

The bill would also create the Enhanced Wireless 911 Government Assistance Fund in the State Treasury to provide financial support for counties in Ohio to upgrade equipment at PSAPs located in the county to support enhanced wireless 911 service. The bill would create the Ohio 911 Council to make recommendations to the General Assembly as to technical standards for wireless 911 provision and as to means to provide a revenue source for the Enhanced Wireless 911 Government Assistance Fund. Finally, the bill would make it a misdemeanor of the 4^th degree on the first offence and a felony of the 5^th degree on subsequent offences when an individual knowingly calls 911 for a purpose other than obtaining emergency service.

The bill would not make any fundamental changes to the county-based provision of emergency 911 service, nor would it require PSAPs to request telephone companies to provide enhanced wireless 911 service.

Background.

Emergency 911 services are not provided on a statewide basis in Ohio. Current law specifies the conditions under which a county may arrange for the provision of emergency 911 services within that county. Enhanced 911 service for wireline phones is scheduled to become available in Noble County in December 2001, making that the 80^th of Ohio’s 88 counties to have such service, and three more counties have firm plans in place to offer enhanced wireline phone service in the near future.

Emergency 911 calls are routed directly to PSAPs, which serve as dispatching points for emergency services of whatever kind is needed. “Enhanced” 911 service has the additional benefit that PSAP staff are able immediately to identify the phone number and location from which a call is being made.

Enhanced wireless 911 service is technically more difficult for wireless phones because of their mobility. The Federal Communications Commission (FCC) has ordered cellular phone companies to offer enhanced wireless service in two stages. In stage I, a wireless phone company would automatically provide the phone number of a 911 caller, and the location of the base station that is handling the 911 call, which would narrow down the location of a caller to somewhere within approximately a two mile diameter circle. In stage II, the phone company would provide the caller’s location within 300 meters of its actual position for at least 95% of calls. The FCC does not dictate the technology to be used to comply with either standard.

Equipping a PSAP creates certain (nonrecurring) costs for telephone companies for new or upgraded switches, for dedicated phone lines and/or for databases to recall the location associated with any given phone number that might make a 911 call. Telephone companies were historically allowed to recover their costs of equipping a PSAP in Ohio by way of a tax credit under the public utility excise tax. The amount of the credit was the full amount of those costs, as certified by the Tax Commissioner. The bill would allow telephone companies to employ this same credit to recover costs associated with upgrading the infrastructure feeding a PSAP to support enhanced wireless 911 service. Receipts from this tax go to the GRF (95.2% of receipts), to the Local Government Fund (LGF—4.2%), and to the Local Government Revenue Assistance Fund (LGRAF—0.6%).

State Fiscal Effects.

The only fiscal effect on the state would be felt through the loss of revenue due to the tax credit against the public utility excise tax. The amount of revenue lost would depend on the costs to wireline telephone companies of providing the necessary infrastructure for PSAPs to operate an enhanced wireless 911 service. A PUCO official estimates that such costs may be of approximately the same magnitude as the costs originally incurred to provide enhanced wireline 911 service. The original credit was authorized in 1985, and the Department of Taxation estimates revenue losses in the early years of its existence were: $2.9 million in 1987; $8.2 million in 1988; $9.7 million in 1989; $4.5 million in 1990; $2.0 million in 1991; and less than $2 million in each year since. Accordingly, the revenue loss resulting from the bill would likely be minimal in FY 2002 and 2003, but may be up to $10 million in a couple of fiscal years during the FY 2004 through 2006 period. A $10 million revenue loss overall would be split amongst the relevant funds as follows: GRF--$9.5 million revenue loss; LGF--$420,000 revenue loss; LGRAF--$60,000 loss.

Although the Ohio State Highway Patrol operates 56 PSAPs, and thus could incur costs to upgrade the equipment at those PSAPs, any such costs would be at the discretion of the Highway Patrol; the bill does not require operators of PSAPs to upgrade their facilities.

The creation of a new felony offense for misuse of 911 services may increase revenue to the Reparations Fund (Fund 402). State court costs generate $9 of revenue for the Reparations Fund in the case of misdemeanors, but $30 in the case of felonies.

The Department of Rehabilitation and Correction’s annual GRF-funded incarceration and post-release supervision costs may rise as a result of the bill’s penalty enhancement provision, but that increase would be minimal as the number of affected offenders will be extremely small.

Local Fiscal Effects.

Similarly the tax credit, through the loss of revenue to the LGF and to the LGRAF, may reduce revenue to municipalities, counties, and townships. Although local governments throughout the state operate PSAPs, and could thus incur costs to upgrade them, as with the effect on the Highway Patrol any such costs would be incurred at the discretion of the local government.

The prohibition against knowingly calling 911 for a purpose other than obtaining emergency service, together with the penalties set by the bill, will have fiscal effects for counties and municipalities that are impossible to predict, even as to whether they will increase or decrease expenditures and revenues. The overall impact is anticipated to be minimal, however.

Currently such violations may be prosecuted under local ordinances or as false alarms under section 2917.32 of the Revised Code, and would be classified as a misdemeanor of the first degree in either case. The bill specifies the offense more clearly than existing statute, decreases a first offense to a fourth degree misdemeanor, and increases subsequent offenses to fifth degree felonies. The increase in specificity of the offense, together with the reduction in penalty, is likely to increase the caseload in municipal courts and courts of common pleas. But since the penalty is reduced, there are offsetting effects on county and municipal revenues, which may increase or decrease. Expenditures associated with prosecuting such cases may increase. The effects on both revenues and expenditures, for both counties and municipalities, are likely to be minimal.

LSC fiscal staff: Ross Miller, Economist

Joe Rogers, Budget Analyst

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BILL:	S.B. 181		DATE:	January 22, 2002
STATUS:	As Introduced		SPONSOR:	Sen. Mead
LOCAL IMPACT STATEMENT REQUIRED:		Yes