Kentucky Stumbles in Finding Revenue for Broadband Debt

Six months after Kentucky borrowed millions to build a 3,400-mile broadband network, the state is having to rethink one of the revenue sources it had expected to be available to pay off the bonds. The Kentucky Economic Development Finance Authority sold $232 million of municipal debt in August to build the fiber-optic network for state agencies, schools and far-flung residents. Yet a challenge by AT&T to Kentucky’s effort to shift a contract that provides Internet to schools is jeopardizing $11 million a year it was counting on for the bonds, according to the state.

Gov Matt Bevin’s (R-KY) administration, which took office in December, said that even with the challenge, the state will find the revenue to fund payments on the bonds, which were sold subject to legislative appropriation. State agencies will use the system, and other users are expected to generate revenue. “The Commonwealth recognizes its contractual obligations under the project agreement and is evaluating all options to ensure the necessary revenue streams are in place to support the program,” said Jessica Ditto, Gov Bevin’s spokeswoman. Kentucky sold its bonds as part of a trend among US state and local governments to build their own broadband systems. About $4.2 billion of debt for broadband and other telecommunication services it outstanding, according to Bloomberg data.