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Committee Adopts Amendment for Rural Broadband Equipment Sales‑Tax Exemption
Summary
The Revenue & Tax Committee adopted an amendment to Senate Bill 605 to limit a sales‑tax exemption for broadband equipment to counties with populations of 20,000 or fewer; DFA estimated a $2.0M first‑year (9‑month) state revenue reduction and a $2.6M full‑year impact.
Senate Bill 605, sponsored by Senator Mark Johnson (Senate, Dist. 15), advanced after the committee adopted an amendment carving out eligibility for counties with populations at or below 20,000. The bill would exempt from sales tax broadband equipment costs paid from company funds (excluding equipment paid with CARES Act or similar grant funds) to encourage deployment in rural, underserved areas.
"This bill would exempt from the sales tax the equipment costs ... when they pay out of their company funds," Johnson said, arguing the measure would incentivize carriers to extend service to otherwise unprofitable rural areas. He noted carrier outreach from AT&T and T‑Mobile indicating support in principle.
Paul Gehring of the Department of Finance and Administration presented the committee’s fiscal estimate: a roughly $2,000,000 reduction in state sales tax revenue based on nine months of collections, and an estimated $2,600,000 full‑year impact. He said DFA used FCC infrastructure estimates scaled to Arkansas to estimate approximately $40,000,000 in eligible expenditures and projected an eight‑year deployment horizon for the statewide build‑out.
Committee members asked about other federal and state funding streams and the interaction of exemptions with CARES Act or ARPA dollars; the sponsor and DFA said the amendment excludes projects paid by such grants from receiving the tax exemption. The amendment was adopted and the bill was positioned for further consideration.
The committee did not finalize a floor vote on the full bill during this meeting; the sponsorship and DFA estimates were entered into the record for future consideration.
