State Budget Wars Spawn Tiff Over TIF

The Telecommunications Infrastructure Fund has handed out more than $1 billion in grants since its creation in 1995.

Anything called a Telecommunications Infrastructure Fund (yawn) won't inspire too much excitement among the Texas body politic. But for those in the know -- libraries, community colleges, rural hospitals, and other longtime have-nots -- the TIF is a very big deal, and the prospect of its elimination this session has raised a world of alarm.

The TIF is often called a "telephone tax," which understates its significance. Imagine if the state's big energy and petrochem firms agreed, in exchange for laissez-faire environmental regulation, to cough up a huge sum of money to provide clean, safe energy and transportation to the poor. That's basically what the TIF does in the telecom realm, and its innate progressive premises make its creation back in 1995 -- with the at-least-qualified support of Southwestern Bell -- fairly miraculous.

But the TIF, and the agency called the TIF Board that runs it, was intended to be temporary. The 1995 Public Utilities Regulatory Act -- the big telecom bill better known as HB 2128 -- called for the TIF to expire either in 10 years or when it collected $1.5 billion. (Other public-welfare provisions of HB 2128 -- such as mandated "E-rate" telecom-service discounts to schools and libraries -- would remain in place.) Since then, the TIF has given out a little more than $1 billion in grants to schools, public libraries, colleges, and nonprofit health care providers, to support investments in computers, software, and networks. (See chart.)

Given the rapid pace of technology, those investments will quickly become obsolete without ongoing funding, say TIF supporters. Bills to extend the TIF's life span have been filed by Rep. Sylvester Turner, D-Houston, and Sen. Eliot Shapleigh, D-El Paso. "For the sake of our communities, we must fight to keep TIF alive," Barry Bishop, library director at Spring Branch ISD and president of the Texas Library Association, told members in November. "Without TIF funds, where will any of our libraries get the same support for telecommunications and technology?"

That was before the Capitol budget panic. Now the $225 million in approved TIF grants have been frozen and Gov. Perry has proposed transferring the remaining $500 million to the Texas Education Agency to fund its "technology allotment" to local school districts (thus allowing TEA to cut its own budget) and shutting the TIF down now.

Half of the TIF is already reserved for public schools, and the other half supports, among other things, collaborations that can include public schools, so the K-12 world has received nearly 60% of the TIF's grants. Perry's proposed "funding swap" is being pitched as something other than a cut in state services, but the TEA already spends as much each biennium just on the $30 per student technology allotment (which isn't the only TEA tech-funding program) as has been awarded to schools from the TIF in eight years.

For the rest of the TIF's nonschool target groups -- particularly the poorer entities among them -- the fund is pretty much the only game in town. And in 2001, the Lege decided that the TIF and not general revenue funds should be the primary source for telecom-related public sector spending.

For example, the TIF's library grants represent nearly half of all state funding for libraries (not just for technology) since 1995. The state's library resource sharing programs -- TexShare (for public and academic libraries) and the Texas Library Connection (for school libraries) -- which support networked databases and reciprocal borrowing and allow (among others) Austinites to get materials from the UT libraries, are now entirely funded by TIF money and would presumably disappear without the TIF. Funds from the TIF have also been used to match other grants, including huge ones from Bill Gates, the Andrew Carnegie of the modern library world.

A similar story prevails at community colleges and smaller public universities, which have relied heavily on TIF funds to implement distance-learning and technology-training programs. And despite its wide-open spaces, impoverished rural communities, and burgeoning health care needs, Texas had barely spent a nickel on telemedicine services until the inception of the TIF.

The TIF Board has not escaped criticism of its accountability. The first director resigned in 2000 after a State Auditor's Office report questioned the agency's tracking of grant-funded projects and its ability to work with other agencies. The SAO also charged that the TIF's grant criteria were not informed by an actual assessment of the state's tech needs or by the Lege's desire that the money be focused on the poorer and needier among its target groups. And despite numerous changes in board personnel and procedure, another SAO report last fall echoed many of the same concerns.

But these internal issues have not been cited by Perry et al. as justification for killing TIF, and legislators are finding that TIF supporters -- particularly librarians, a much more aggressive lobby than you might expect -- are giving the issue more visibility than Perry may have anticipated. Sen. Todd Staples of Palestine, Texas, for example, found that his constituents were well aware of the TIF and its troubles at an electronic town-hall meeting this weekend. The equipment to make the videoconference possible was paid for by a TIF grant.