It may seem counter-intuitive to call Michigan’s counties “losers” when they would theoretically receive just under $1 million of increased 911 funding under a tax increase proposal put forward by Michigan’s State 911 Committee (SNC). Sometimes, however, looking a gift horse in the mouth can reveal unexpected results.
In August, the SNC released its “Annual Report to the Michigan Legislature.” Tucked into the 91-page document is a proposal for rewriting the state’s 911 funding law. The stated motivation for the changes is that funding needs to be reworked because one mechanism – the wireless 911 fund – is projected to run out of money sometime in 2018. Without adequate resources in the wireless fund, the burden of paying for Next Generation 911 (NG911) systems would shift from the fund to individual counties. Since the fund receives revenues generated from a statewide 911 surcharge on telecom customer bills, the SNC believes increasing the surcharge amount by more than 30% is the only way to solve the problem.
But here’s the real problem: the SNC’s own projections show that $2.6 million dollars would shore up the wireless fund in 2017. Why, then, does the SNC’s proposed surcharge increase raise $9 million annually from Michigan consumers?
This is when the equivalent of a good equine dental exam can help diagnose the winners and losers under the SNC proposal.
The only winners are the SNC and the State 911 Office (SNO). Today, both entities have oversight roles but the ultimate regulatory authority resides with the Michigan Public Service Commission (MPSC). If legislators passed the SNC proposal, the SNC itself would become a regulatory agency, despite the fact that the committee answers to no one in state government. To fund its new powers, the SNC and SNO would go from a combined 2015 budget of just over $530,000 to one controlling more than $9,700,000. Not a bad gig if you can get higher taxes to pay for it.
Taxpayers, obviously. What will consumers get for the extra $9 million they will be paying for 911 annually? Nothing that isn’t already being provided without higher taxes and new regulations. In fact, they may get less when telecom companies pull back on NG911 investments as a result of the increased costs imposed by the state.
Next on the losers list are counties. Despite being promised a minimal funding increase, the trade-off is that counties will have to give up a great deal of their local control. Why? Under today’s law, counties can contract directly with private sector telecom companies to upgrade their 911 networks to NG911 systems. Then those companies get reimbursed for a large percentage of their expenses from the wireless 911 fund. Counties are free to choose companies that offer solutions that meet their individual needs. That freedom has already allowed dozens of counties to transition to start transitioning to NG911, making Michigan a national leader in NG911 deployment.
If the SNC proposal is adopted, the SNC will be in charge. Counties looking to offer citizens NG911 services would have to pick from a pre-selected list of “committee approved” companies. To get on that list, companies would need to agree to submit to SNC oversight of their expenses in order to receive reimbursement from the wireless fund. This sets up a situation in which a company wanting to offer counties innovative services would want to know in advance whether those services would qualify for wireless fund reimbursement before they would move ahead with any investments. Since the SNC (unelected and unaccountable) would make those determinations, counties would be constrained by the companies and services the SNC chooses to green light instead of being free to make their own decisions. That’s a lot of local control to give up just for a share of the $862,500 in higher tax revenues spread over 83 counties that the SNC proposal would generate.
The final losers will be telecom companies. Michigan would quickly go from being a national leader in NG911 deployment to a national laggard. Why would companies choose to submit to double regulation – by the MPSC and the SNC – when other states have more welcoming investment climates? And what will companies have to agree to in order to become an approved provider of the SNC? The SNC would be put in the difficult position of picking winners and losers on multi-million dollar projects without being accountable to taxpayers. The potential for controversy could be another deterrent to companies thinking about investing in Michigan.
Realistically, the SNC proposal will be politically DOA even if they can convince a legislator to introduce it. Asking legislators to raise taxes is always hard, but asking them to raise taxes by $9 million in order to create a new regulatory empire when just $2.6 million will solve the wireless fund problem in 2017 is likely to be a non-starter. Is there a better solution?
Yes. The legislature can prioritize public safety expenditures in the state budget. In total, nearly $200 million is spent annually on 911 operations across Michigan. Virtually all of that money comes from county general funds, local millages and telecom bill surcharges. If the state legislature approved a $2.6 million appropriation (amounting to about 1% of total 911 expenses), it would ensure that counties could continue transitioning to NG911 in 2017, avoid the need for a tax increase, and avoid creating yet another state regulatory agency. Best of all, the only losers would be those at the state level who want to control decisions best left to elected county officials.