Minnesota lawmakers likely to spend $100 million on broadband. How far will that go?

Minnesota lawmakers plan to spend $100 million to help subsidize high-speed internet infrastructure, an amount that would be the largest one-time payment by the state in broadband funding, but still draws a mixed response from developers and local officials who say rural areas are being left behind. behind them.

The Bundesliga’s top leaders announced the $100 million plan on Tuesday at the Capitol as part of an agreement on… budget “goals”. that will direct spending by legislative committees. Democrats have majorities in the House and Senate and control the governor’s office.

“It is certainly the largest commitment the state has made to date on broadband,” said Rep. Christy Purcell, a Northfield Democrat. Sponsored legislation to fund Internet infrastructure this year. “The need is much greater than that. That’s less than half of the bill I proposed.”

Minnesota is waiting for a much larger influx of federal funds to help connect many parts of the state to high-speed internet. But even though nearly $1 billion is on its way, a state task force estimated that Minnesota still needs about $426 million to meet its broadband goals.

Many broadband advocates saw this year — when lawmakers have a whopping $17.5 billion in surplus — as perhaps their best to secure a chunk of the funding. But with a host of competing priorities, the Bundesliga leaders struck a deal for less than Governor Tim Walz and some lawmakers originally asked for.

That’s likely to be a common story among advocates for many issues in the legislature this year, as interest groups jostle for a rare opportunity to win huge amounts of cash.

“I’m not going to lie to you, I’m a little disappointed,” said Brent Christensen, president and CEO of the Minnesota Telecom Alliance, which represents more than 70 companies.

Where Minnesota stands on broadband financing

Minnesota’s current goal for high-speed Internet is universal access to wired service with download speeds of at least 100 megabits per second and upload speeds of up to 20 megabits per second by 2026.

About 88% of households and businesses in the state had access to that level of broadband in October, according to estimates released in a Report of the Governor’s Working Group on Broadband. In rural areas, only about 62% have what the state considers adequate broadband, a problem that became an even greater problem during the COVID-19 pandemic when more people were forced to work at home and children went to school online.

The gap in broadband coverage is due to money. Developers say some areas are very sparse, or the terrain is very challenging, which makes building the infrastructure worth the cost. That’s why the state and the federal government are subsidizing infrastructure construction — such as digging roads for fiber optic cable deployment — to entice rural internet providers.

State officials estimate it would cost $2.76 billion to serve the 291,000 households and businesses that lack rapid-service infrastructure. It’s an amazing price, but most of the money won’t come from the Minnesota legislature.

Government grants typically require a 50% match from broadband developers or other project participants, such as city and county governments, meaning that the state government is only responsible for half of the cost.

And the federal government has gone to great lengths to help Minnesota cover the remaining $1.38 billion of the $2.76 billion. The task force estimated that Minnesota could get $968 million from the Feds, most of it coming from Infrastructure bill passed by Congress in 2021.

That leaves Minnesota with approximately $426 million to reach its goals, an estimate that includes administrative costs and is based on a 50% matching program. Pricing is still speculative, said Bree Mackey, director of the Minnesota Office of Broadband Development at the Department of Employment and Economic Development. That’s because factors like construction costs can be a moving target.

Big budget request

However, that $426 million estimate is why Walls and some lawmakers are proposing $276 million in government spending on broadband this year. While $276 million may not be enough to finally reach Minnesota’s 2026 goals, the money would far outpace any one-time infusion of state money into the Border-to-Border grant program since it began in 2014.

Last year, for example, lawmakers approved $25 million in state funds for use in fiscal year 2023 and another $25 million in the current biennium. (Lawmakers have also funneled another $160 million in federal money into broadband infrastructure.)

This year, DFL legislators, too Plan to save some money A program designed to help hard-to-reach areas. The initiative impresses developers by offering 75% higher matchmaking. The legislature passed a “low-intensity” pilot program in 2022, which ended up receiving more applicants than $30 million if each project met approval criteria.

Steve Giorgi, executive director of the Association of Municipalities and Schools, told the House Agriculture Finance and Policy Committee during the meeting March 7 session It is “increasingly difficult and challenging” to implement projects in the region because of the groundbreaking.

Giorgi also said that Paul Bunyan Communications hopes to build fiber out of Chisholm, where the density in Angora is 3.31 homes per mile, and the cost per “pass” — when running fiber to a home or business — would cost more than $15,500.

“There is no way this project could have been implemented had it not been for the low-intensity pilot programme,” Giorgi told lawmakers. “We hope they get a grant.”

Even in the Twin Cities metro area, there are problems with the internet. Bundesliga Sen. Jody Seeberger, lead sponsor of the $276 million bill, said she didn’t have broadband when she moved into her Afton home in 2011. Comcast told her it would cost $76,000 to connect her home.

Seeberger said in a Hear Monday On the Senate Agriculture, Broadband, and Rural Development Committee.

A day later, Walls, House Speaker Melissa Hortmann and Senate President Bobby Joe Champion announced that they had reached an agreement that included $100 million in broadband spending in the next two years’ budget.

Some Republican lawmakers are questioning whether broadband spending is worth the state’s money and wondering whether satellite services like Starlink or other emerging technologies will render expensive fiber subsidies pointless. But broadband grants generally have broad bipartisan support and strong support from many Republicans. Both the Seeberger and Purcell bills have GOP sponsors, including Sen. Tory Wistrom, R-Alexandria, who is the top Republican on the Senate Broadband and Rural Development Committee.

Democrats have also fought in the past over whether The metro-focused party has invested enough in a service that mainly helps people in rural areas.

reaction to the budget deal

Some broadband advocates applauded the target budget of $100 million. It was a “strong statement” from lawmakers that broadband remains a key priority in a session where DFLers have a lot of programs they hope to fund, said Nathan Zacharias, a technology policy analyst for the Minnesota County Assembly.

With the federal funds arriving, he said that $100 million would be a “really healthy safety net” and bridge the gap until that federal cash arrives in 2024 or 2025. Some worry that simply waiting for money from the feds could cause Minnesota to miss a building season as well. It happened in 2021.

Christensen said he’s grateful for any money and is primarily interested in directing money to areas without broadband options. But he also has $100 million that may not be enough to meet applications in the regular grant program and he still has money left for a low-intensity initiative that he said is important. “We really thought the governor’s proposal would be very well received,” he said of the more expensive bill.

Barbara Drohr-Klein, Le Sawyer County Broadband Consultant, said her district is ready to build and said the $100 million figure is “very disappointing.” The rest of the county is “all low-density,” she said, and the longer projects wait, the more they will cost over time.

“We have lakes and gravel pits and rocks,” said Drewher Klein. “We have rock that one of our providers broke into a little bit and had to dynamite it.”

Purcell said the $100 million deal was the result of negotiations by senior leaders, and was not based on some broadband need criteria. “It’s a pretty round number,” she said of how they landed on the target.

But DEED’s McKee said the money will still be historic. “We know $100 million, even though it’s a lot of money, isn’t going to get the job done,” Purcell said. “But certainly because of the uncertainty of when we might get the federal money, we can’t afford to lose another building season.”