The WyoLink Tax

by Philip Baron, MBA

At the October meeting of the interim Joint Transportation, Highways & Military Affairs, a fifty-cent tax "fee" was proposed on every phone connection in the state. The proposed bill was not sponsored by the committee, who declined to vote on moving the bill out of committee. This fee would be administered in a similar way to the 911 fee collected on each phone service in the state.

This revenue would be used to help fund the current WyoLink radio system that has been in place since 2005. This system of 77 radio repeater towers around the state allows for interoperability between state, local, and federal law enforcement and emergency response agencies.

The most frequent users of the system are the Wyoming Highway Patrol and the Wyoming Department of Transportation (WYDOT). The radio system consists of 77 fixed repeater towers through the state that allows different agencies to communicate with one another and coordinate their operations in the vast open areas of Wyoming that do not have cellphone coverage.

WYDOT argues that the WyoLink system is used indirectly for 911 calls when the dispatcher may use the WyoLink system to call the necessary personal. The dispatcher may also use other systems to call the first responders and is not required to use WyoLink. The telecom industry argues that WyoLink is not a direct part of the 911 system and should not be funded by a tax.

The WyoLink system is administered by WYDOT, who is asking for $5.5 million a year over the next six years to cover upgrades and maintenance of the system. Part of this yearly asking price, $2.03 million, would be for upgrades to the current radio system used to replace repeater equipment that will no longer be supported by the manufacturer after 2020. The other $3.35 million would be used for service support and routine operation costs of the system.

The proposed legislation would have $3.8 million come from the general fund of the State of Wyoming. The rest of the money would come from the purposed tax or "fee" placed on each local exchange access line, and each wireless communications access (pre-paid and postpaid) ¹.

The primary problem here is that telephone companies are now going to be asked to collect and administer a tax for the government that should be paid for with a different funding mechanism.

Collecting a tax is never free. There are always going to be administrative costs that are associated with the collection of a tax. The bill writers recognized this fact and allowed for the telephone service provider to retain two percent of the service charge for the costs of administration.

If you look at your phone bill, there are a lot of taxes that are listed. For example, a Verizon Wireless phone bill in Laramie County, Wyoming will have nine separate surcharges, taxes, and government fees listed. Some of these taxes are administered by the phone company in the same way that the purposed tax would be.

Phone service in Wyoming is subject to sales tax at the same rate as the county where your phone is registered. The argument that representatives for both AT and T and Verizon made at the committee meeting was that the collection of this additional tax would cost money to administer the tax because of additional staff needed to collect the tax.

Also, they made the argument that the collection of this tax would pose an audit risk because it makes their billing more complex, and it makes their accounting compliance more complicated for their billing office.

The amendments proposed by representatives of the telecommunications industry would have the WyoLink program wholly funded through a $5.5 million yearly appropriation from the general fund.

This change in funding makes the most sense since sales tax is paid on each phone bill and that money a portion of that money goes to the state's general fund. WyoLink does not need to be funded through another tax. It should be financed from the current sales tax that is already paid by telephone customers in Wyoming.

¹ The purposed law allows for an exception for a business that has more than 100 local exchange access lines. That business meeting the above qualifications would pay the "fee" once.