States Continue 911 Fund Raids

Published March 14, 2011

States seeking to cover budget shortfalls are increasingly raiding funds raised from fees paid by cell phone customers for maintenance of and enhancements to state 911 services.

Georgia has joined Hawaii and Michigan among 11 states reallocating funds designated for 911 services to cover expenses in the states’ respective general funds. Washington state and the District of Columbia are reportedly proposing similar measures.  

Kenneth Braun, a senior policy analyst for the Michigan-based Mackinac Center for Public Policy, says these fund raids are tax increases by another name.

“Every taxpayer should hold their wallet close whenever a ‘fee’ is discussed as if it is always different from a tax,” he said. “Fees created for supposedly specific purposes have a nasty way of morphing into general slush funds when politicians want to avoid making tough choices.”

Infrastructure Completed, Fees Continue

This past November, Infotech & Telecom News reported on a 911 fund  raid in Hawaii that moved $16 million to the state’s general fund.

In January of this year the Atlanta, Georgia Journal-Constitution reported fees the state began collecting three years ago on purchases of prepaid cell phones brought in approximately $25.7 million. The money was designated for 911 call centers but was never appropriated for its originally stated purpose.

This past fall, Michigan legislators approved a 911 fund raid that would move $7 million for each of the next two fiscal years. Braun notes the infrastructure the phone tax was intended to create was completed several years ago and the tax was supposed to end, but legislators extended it through 2014 in 2008.

Braun also notes the fund—raised from a 52-cent cell phone fee—was previously raided in 2004 and again in 2006. The 2004 raid took $12 million from it to cover general fund spending, and the bill in 2006 took another $15 million.

‘Fees = Taxes’

Braun adds, “While the 2008 bill reduced the 911 ‘fee’,’ by this point it was nothing more than a ‘tax’ in all but name, a tax with six years of renewed life thanks to state legislators.”

Regardless the original purpose of fees, they become tax hikes when used for something else, Braun says. “The bottom line is that these tax hikes fuel general spending.”

Braun says lawmakers who vote for fees and later vote repeatedly to divert spending to other uses more than likely don’t see these efforts as raising taxes.

“These fees were taxes to begin with, and they are taxes now,” he said. “There is no difference, but implementing a tax for one purpose and switching it to another account to pay for bloated state governments is something taxpayers should hold their lawmakers accountable for,” he said.

Bruce Edward Walker ([email protected]) is managing editor of Infotech & Telecom News.

On the Internet

“Hawaii Raids Telecom Funds to Balance Budget,” Infotech & Telecom News, November 2010:

“State Has Diverted Millions in Fees,” The Atlanta Journal-Constitution, January 18, 2011: