Council Wants Residents to Vote on Phone Tax Increase in 2008

The Prince George's County Council tentatively agreed yesterday to ask voters whether to increase the telephone tax to pay for education, rejecting a proposal by County Executive Jack B. Johnson (D) to impose the increase without giving residents a say.

Council members agreed that the phone tax is subject to a tough county charter provision in place since 1996 that requires voter approval for any local tax increase. By a vote of 6 to 2 with one abstention, a council committee approved a bill that would put the tax increase on the ballot in November 2008. The council must hold a public hearing before it takes a final vote.

"The voters have spoken, and this is the process they want for raising taxes," said council member Thomas E. Dernoga (D-Laurel). "It would be nice if we listened to them."

Johnson proposed raising the tax from 8 percent to 11 percent on all phone bills, including mobile phones and land lines. He estimated that the increase would bring in $17.1 million this year, earmarked for education.

Prince George's has had a voter-imposed cap on its property tax rate since 1978. In 1996, voters expanded the restrictions, requiring that any tax increase be approved in a referendum.

Johnson argued that the telephone tax was exempt from the requirement because it is a state rather than local tax, first imposed in 2002 by the General Assembly. The law required a rate of at least 5 percent; the council chose to set the rate at 8 percent in 2002.

In a written opinion, a lawyer in the attorney general's office backed Johnson's position in May, ruling that the county charter does not apply to the phone tax. But at a hearing yesterday, council lawyers disagreed.

Johnson said yesterday that he respects the council's right to interpret the charter. But he insisted that the dollars raised through the telephone tax are critical to improving the school system. "The real issue for us is that we have to be willing to tax ourselves if we're going to provide the services we must have," he said. "People must be willing to pay for the quality they want."

If the council ultimately approves the bill, it will go to Johnson for his signature. A spokesman said Johnson will decide whether to approve the proposal after the council's final vote.

Telephone and wireless companies had banded together against the proposed tax increase. They argued that Prince George's residents would pay, when combined with state taxes, an 18 percent tax on wireless phone bills, one of the highest such fees in the country.

Tara Potter, assistant vice president for external affairs at Verizon Maryland, said yesterday that the company had hoped the council would reject the tax. "This isn't really a victory at this point," she said, adding that the company will now decide whether to keep lobbying before the bill's final passage. "The victory will come when consumers aren't saddled with this tax."

Joe Farren, a spokesman for a wireless trade group, called the proposed tax rate "excessive and regressive." He said if the council decides to send the increase to referendum, his group would consider campaigning for its defeat.

Meanwhile, Judy Robinson, an activist who fought for the charter amendment when it was adopted in 1996, called the council's initial support for a referendum "courageous."

"I would congratulate the County Council on simply doing what people asked them to do, and that was follow the law," she said.

The council approved a budget in May that included the revenue from the increased phone tax for county schools. If council members now approve a 2008 referendum on the tax, the money will not be available for more than a year and they will have to find a way to fill the budget gap.

School Superintendent John E. Deasy said the school system also included the tax revenue in its budget. "We expect the county to honor its revenue commitment, and we will work with together to find ways make that happen," he said.