ATR has long argued that excise taxes raised for specific government programs rarely go toward funding them. Cigarette taxes are a favorite of big-spenders, for example, who tout smoking cessation programs, but don't use the revenue to fund them. But, to understand why you should never trust a lawmaker who tells you why a specific excise tax is necessary, look no further than 911 phone taxes.
According to an FCC report released yesterday (PDF), last year 13 states redirected over $135 million in E911 taxes, which are levied on phone lines and are supposed to invest in emergency phone systems. Instead, 10 of them poured millions of dollars into their states’ general funds to cover overspending problems, while 3 others redirected the money to other administrative expenses. Topping the list was Illinois ($30.5 million), Wisconsin ($25 million), Hawaii ($16 million), Rhode Island ($13 million), and New York ($10 million).
Perhaps most egregious, however, was the raiding of the fund by Wisconsin Gov. Jim Doyle (D). Last year, the E911 fund was slated to end and the $20 million balance left after 911 service upgrades was to be returned to consumers as a credit on their phone bill. However, Doyle insisted on extending the tax, raising it to 75-cents, and kicking the money into the general fund for non-911 services. For good measure, he added another 56-cent tax to phones to fund universal service subsidies.
ATR's Center for Fiscal Accountability has calculated that 51.8% of your landline bill and 46.4% of your cell phone bill go toward paying for government taxes, "fees", and regulations.
Below are the states that used 911 taxes to fund excess general fund or administrative spending:
- Arizona: $8.7 million to General Fund
- California: $2.4 million to purchase multiple, unauthorized 911 hardware systems
- Delaware: $4 million to General Fund
- Georgia: $8.5 million to State Treasury
- Hawaii: $16 million to General Fund
- Illinois: $30.5 million to General Revenue Fund (since 2003)
- Nebraska: $3.4 million to General Fund; $273 thousand for administrative expenses
- New York: $10 million to General Fund
- Oregon: $3.6 million to General Fund (plus interest accrued by remaining 911 funds)
- Rhode Island: $13 million to General Fund
- Virginia: $8 million for administrative salaries
- Washington: $6 million to General Fund (law modified in 2001 to permit redirecting)
- Wisconsin: $25 million to General Fund