Capitol Connection

By State Senator Joe Leibham

November 12, 2008

 

A Rare and Successful Tax Phase-Out

In 2003, I worked with a bipartisan group of my colleagues in the State Legislature to improve the ability of local emergency response agencies to pinpoint the location of someone making a 911 call from a wireless telephone.  Our effort, which was signed into law as 2003 Wisconsin Act 34, laid out a process to implement new technologies and provide a temporary funding mechanism for the local units of government charged with putting the plans into action.

Known as “Enhanced 911,” or E911, Act 34 addressed an unfunded federal mandate handed down by the Federal Communications Commission (FCC) that required wireless phone providers and local municipalities to make E911 services available by 2005.  Act 34 encouraged local governments to work with wireless phone companies to utilize technology that accurately pinpoints an emergency wireless phone call within 100 yards of its origin – significantly improving public safety.

Unfortunately, as my fellow legislators and I dug further into the issue, it became increasingly evident that the technology that was needed to properly implement the federal mandate came with additional costs.  While the state government would have been allowed by federal law to pass these costs on to local municipalities, Act 34 included a funding tool that protected local property taxpayers by allowing for a modest tax on individuals who use wireless phones.  If you have wireless telephone service, this tax is the “Federal Wireless 911 Mandate Fee” that showed up on your monthly bill.

As a co-author of the legislation, I worked hard to include a strict sunset date for the tax.  Only the necessary revenue would be collected to fund the equipment upgrades, and then the tax would end.  Some people questioned if this would happen, doubting that a government tax would ever end.

I am pleased to report that the upgrade process is essentially done and the E911 tax was officially ended on July 9, 2008 – a few months ahead of schedule.  You should no longer see the “Federal Wireless 911 Mandate Fee” on your wireless bill. 

It was not easy getting to this point.  As every taxpayer knows, far too often a unit of government passes a tax that is initially meant to be temporary, only to be made permanent after its original purpose has been fulfilled so that the funds from the tax can be raided and used elsewhere.

One example of a tax gone astray is our state recycling tax.  Originally enacted in 1991, the “state recycling surcharge” was meant to sunset in April 1999.  However, seeing an opportunity for additional tax dollars, the State Legislature and the Governor, as a part of the 1999-2001 state budget, resurrected the recycling surcharge and it remains in effect today – nine years after it was supposed to end.

An attempt to repeat history with the E911 tax was made during the deliberations over the 2007-09 state budget.  Specifically, a budget amendment was introduced by various Democratic members of the Joint Committee on Finance (JCF) which sought to delay the sunset of the tax for another two years, taking millions of additional dollars out of our pockets and sending it to state government.  Some legislators argued that, because the tax equates to less then ten dollars per year, it was foolish not to extend and receive the additional revenue – who would really know?  I argued that the tax was created with a specific purpose and a specific ending date that should be adhered to.  In addition, ten dollars is ten dollars and, when added to our overall tax burden, this does have an impact on all taxpayers.

This amendment was defeated and I appreciate the efforts of my colleagues who stood up for average taxpayers and voted down this stealth tax increase.

This was a good case study in how our government should work.  A legitimate service improvement was identified.  We worked to ensure that the improvement was done in the most cost effective way possible.  Efforts were made to cover the funding needs by assessing those who benefit from the service, not the overall taxpayers.  A strict sunset was established for the new tax and the legislature obeyed the sunset.  In an on-going effort to protect all taxpayers, I will work to ensure this example is followed in the future. 

Is there a state program, law or issue you would like me to address?  “Just ask Joe” by calling me at 888-295-8750, writing to P.O. Box 7882, Madison, WI 53707-7882, or by e-mailing me at Sen.Leibham@legis.wi.gov.  You can also log on to the 9th Senate District on-line office at www.leibhamsenate.com.

As always, it has been a pleasure communicating with you.  It is an honor representing the residents of the 9th District in the State Senate!