Page 457 - FY 2021-22 Blue Book Volume 2

TELECOMMUNICATIONS LIQUIDATED DAMAGES AND
LOST FRANCHISE FEES FUND

TELECOMMUNICATIONS DEVELOPMENT ACCOUNT

BASIS FOR THE PROPOSED BUDGET

The 2021-22 Proposed Budget for the Telecommunications Development Account (TDA) relates to current year
funding as follows:

Amount % Change
2020-21 Adopted Budget $ 20,341,736

2021-22 Proposed Budget $ 7,664,323

Change from 2020-21 Budget $ (12,677,413) (62.3)%

Historically, the TDA was primarily funded by cable television franchise fees. The cable television franchise fee is a
payment to the City for the use of City streets and rights-of-way. It is calculated at the rate of five percent of gross
revenue received by the cable companies. While the receipts generated by these fees are unrestricted, pursuant to

Los Angeles Administrative Code (LAAC) Section 5.97, the City divides the telecommunications franchise fees

between the TDA and the General Fund, with 40 percent of all funds received or collected deposited into the TDA
and the remaining 60 percent deposited into the General Fund. Pursuant to the LAAC, TDA franchise fee funding
may be used for Public, Educational, and Government (PEG) access programming and other telecommunications

uses. The five percent franchise fee funding can also be transferred to the General Fund to be used for other

purposes.
Consistent with the City’s Financial Policies, which stipulate that “unrestricted General Fund revenue streams shall
not be designated as restricted or special funds,” the 2021-22 Proposed Budget proposes that LAAC Section 5.97
be amended to deposit 100 percent of the cable television franchise fee revenue to the General Fund. Revenue to
and expenditures from the TDA are therefore reduced in 2021-22 due to the elimination of cable television franchise
fee receipt deposits into the Fund. No services or positions are eliminated as a result of this technical change, as all
items previously funded by the TDA from these cable franchise fees will now be funded by the General Fund.
In addition to the five percent cable television franchise fee, the TDA also receives one percent of cable companies’
gross receipts for capital costs related to PEG access programming. Pursuant to Council File 16-0022, a portion of
these funds are eligible to be used for PEG operational, in addition to capital, costs. Funds from the PEG capital
cost franchise fee that are not appropriated for specific purposes are held in a reserve account. There is no change
to the administration of these PEG access programming fee receipts proposed in the 2021-22 Proposed Budget.
2020-21 2021-22
REVENUE Adopted Proposed
Cash Balance, July 1 $ 35,582,590 $ 34,292,102
Less:
Prior Years’ Unexpended Appropriations 33,710,854 32,700,779
Balance Available, July 1 $ 1,871,736 $ 1,591,323
Receipts:
Franchise Fees 12,361,000 --
PEG Access Capital Franchise Fees 6,074,000 6,073,000
Miscellaneous Receipts 35,000 --
Total Revenue $ 18,470,000 $ 6,073,000
Telecommunications Development Account Available Funds $ 20,341,736 $ 7,664,323
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