Central Oregonian

Police chief testifies to legislature on need for 911 tax funds

The 75-cent tax has not increased since 1995 and sunsets this year

Ramona McCallister

March 18, 2013

When time is of the essence in an emergency, most people take for granted that 911 operators will be on the other end of the line when that moment arrives.

What many consumers of the service don’t realize is that approximately one-third of this service is funded by a tax collected on their phone bills. This tax sunsets every six years until the Legislature takes a positive action to renew that tax. Prineville Police Department Chief Eric Bush went to Salem on Thursday to testify to the Oregon House of Representatives on two key points on behalf of the Oregon Association of Chiefs of Police and Crook County’s own 911 center.

This year, the sunset clause is up once more for renewal, and without it, 911 centers and their services would be adversely affected.

“That tax would cease to be collected,” said Bush. “The challenge is that it is the only source of revenue that is specifically designated for 911 anywhere, in any level of government.”

He added that when the 911 system was created, that tax was also created as a way to support the system to fund the operation of centers across the state and as a way to upgrade and replace equipment. The tax was put in place in 1981, and the original rate was a 3 percent tax. Just like it is currently, the tax was assessed on customers’ phone bills. It was eventually increased to 5 percent, then in 1995, it was changed to a flat 75 cents.

Since 1995, the 75-cent rate has never been increased, despite the consumer-price index increases since that time.

“The 75 cents of value that we received in 1995 now costs the local 911 centers $1.13,” noted Bush. “As a result, that 75 cents doesn’t have the same buying power that it had in 1995.”

The revenue for the local 911 center from that tax, funds approximately 27 percent of the 911 operations in Crook County. The balance is funded by tax payers, the City, and the County.

The second part of Bush’s testimony centered on the changes in technology in 911 centers. In 1981, when the tax was first put in place, cell phones were not on the radar.

“As a result, when cell phones came into prevalent use, the federal government mandated that every cell phone, whether or not the service is active or not, could access 911,” said Bush. “If you have a cell phone, and you have turned it off for any reason, as long as it has a charge, you can still power that cell phone up and call 911. That would be the only number you could call.”

Currently, every cell phone or landline service has a 75- cent surcharge assessed for 911. Bush commented that this worked well for the landline services, but with cell phones, the 911 service was still active — even if the user wasn’t paying the bill.

“We lose the ability to recoup our cost for answering 911 calls that come from cell phones that are deactivated, because although they are deactivated for general use, they still can be used for calling 911.”

Another new dynamic with cell phones includes the fact that the user can buy minutes as they need them, and there is no mechanism for collecting revenue for prepaid cell phones.

“Anybody using a prepaid cell phone avoids this tax altogether,” he said.

Bush said that in many centers around the state in the past year, approximately two-thirds of the 911 calls come from a wireless device or telephone.

“We are missing a significant amount of money because of these changes.”

Oregon Representative Mike McLane (R-Ore) commented that the Legislature needs to fix the funding of 911 services.

“We can, in essence, renew the sunset and keep the current system, or we can have a point-of-sale assessment that brings parity to all cell phones,” said McLane..

He indicated that he is inclined to support the parity of cell phone assessments, specifically when all those who have a cell phone provider pays their bill each month and are assessed the 75 cents to support 911 services.

“Those who use prepaid cell phones don’t pay that tax, but should, as they are beneficiaries of the 911 services,” added McLane.

House Bill 2036 extends the sunset for the 75-cent tax for another six years, but it also defines prepaid cell phones as subject to this tax. There is a debate on the best way to collect the tax. One way would be to collect the tax at the point of sale, and the other would include the provider paying the tax on the telephone number.

McLane noted that the method of collecting tax at the point of sale made the most sense.

Bush said that the issue of collecting the tax at the point of sale brought up discussions at the hearing as to whether a renewed discussion should take place about a sales tax.

“That is another concern — that this would get off into an area that quite frankly, doesn’t involve 911,” he indicated.

McLane said he is not concerned about a sales tax discussion preventing adequate funding for 911 services.

“We’re not collecting a tax to put in the general fund for funding of schools and public safety and the like, therefore I distinguish them,” he emphasized.

Bush’s message to the Revenue Committee was that the most cost-effective method is requiring the cell-phone providers to pay the tax on each individual phone line.

“It’s easy to administer, it’s equitable, and everyone pays the same rate,” he said.