June 2004

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Cal-Tax Commentary

Larry McCarthy is president of the California Taxpayers’ Association, headquartered in Sacramento.

Proposals by cities to tax telephone lines are cropping up like mushrooms in California as local governments seek to pay for rapidly increasing public employee benefits and other escalating program costs. They are calling it an emergency telephone system fee, or a surcharge – anything but a tax – because city councils are trying to avoid having to get permission from voters for a tax increase.

It’s being discussed or proposed in Union City, Concord, Vallejo, Stockton, San Jose, Watsonville, Capitola, San Bruno, San Rafael, Novato, Santa Cruz County, San Francisco and undoubtedly elsewhere. On April 20, the Santa Clara County Board of Supervisors rejected the new tax increase by a 4-1 vote. Under threat of legal challenge, some jurisdictions are moving cautiously. Officials in San Rafael say they are holding off, waiting for results of a lawsuit filed by wireless carriers against the Union City tax.

These proposed new local taxes are bad calls. They are stealth taxes to raise money for hiring and paying more police or firefighters by piggybacking onto the state’s emergency 911 telephone system. Residents of these cities must not be misled by those who mischaracterize a tax by calling it a fee.

The proposed Local Emergency 911 “fees” are a blatant attempt to raise taxes by circumventing the California Constitution. Propositions 13 and 218 were constitutional amendments approved by voters to require local voter approval before taxes are increased. California voters have been emphatic in requiring popular votes for local tax increases.

A key reason for the popular vote requirement is to protect groups of taxpayers from being targeted unfairly to pay for general government services that benefit the entire community. Public safety is a basic function of government and should be funded that way, not by placing a tax-like fee on one targeted group.

Current state-level emergency telephone fees already ensure a reliable system for people to call for emergency help. Those funds are not to be used to fund law enforcement functions, much less other general fund obligations for government. The proposed Local Emergency 911 “fees” are intended to do just that – fund law enforcement services and general government.

Under state law, 911 is an emergency communications system, not an emergency response program.  Funding for services unrelated to maintaining or upgrading the 911 network – such as emergency dispatch, call centers, and personnel costs – should not come from Emergency 911 fees.

If cities want to raise taxes to create new funding to run their 911 call centers, or for other general fund purposes, they should follow the state Constitution and go to the voters for approval. They should not circumvent the law because they’re afraid voters won’t give them the new money they’re seeking.

Cal-Tax supports the need to maintain the integrity and reliability of the Emergency 911 networks. New local taxes on the state 911 system are a dangerous precedent that potentially threatens the current Emergency 911 system.

Here are the facts:

• Local governments can access the state 911 fund to get their expenses reimbursed for the costs associated with their 911 communication systems.

• Local governments can use the state 911 fund to get their expenses reimbursed for wireless 911 infrastructure.

• Emergency 911 funds are not intended to fund dispatch centers or pay the salaries of police personnel.

• The existing 911 state surcharge is used to pay for local services that are strictly defined by the California Department of General Services’ 911 program office. These services include network, database, public safety answering point (PSAP) equipment, wireless 911, master street address guide, some training activities and other costs associated with their 911 communication systems.

• It is a dramatic expansion for fees to exceed the costs of providing those 911 services.

• Under state law, E-911 is an emergency communications system, not an emergency response system.

• The fee is intended to ensure that there is an emergency communications system that allows people to complete calls for help.

• Once the phone call for help is complete, the emergency is in the hands of the local jurisdiction.

• The emergency response of the local jurisdiction is not part of the physical network that allows people to complete a phone call for help.

Fees that cross that threshold should be considered a tax and require voter approval.