Dedicated taxes do the job but then don't die

From Real Clear Markets

"Ever on the prowl for new revenues, New York initiated its 911 tax at the dawn of the era of widespread cell phone use, in 1991. Since then the tax has generated more than $600 million in revenues, but of that money, a paltry $84 million has been spent on 911 services, according to an investigation by the Buffalo News. Last year $88 million from the tax went straight into the state's general fund and millions more were used to pay for public safety services that used to be financed by the state's general taxes, including millions spent by the state's National Guard. In New York, so little money makes it to EMS centers from the tax that most counties now have their own 911 tax, on top of the state's tax.

Inspired by such outright audacity, other states have moved in on 911 taxes. Wisconsin built up a $25 million surplus in the fund in just four years, but rather than end the tax or at least cut it after doing the upgrade work, the legislature swept the surplus into the general fund and, just for good measure, more than doubled the fee. This year, according to the AP, Oregon, Arizona, Delaware, Hawaii, Rhode Island and Tennessee are also diverting money from their funds. These states have filched this money even though a 2008 federal law says states can't use 911 taxes for other purposes. Still, Tennessee argued it could take the money because it was only grabbing the interest that was building up on the tax, not the tax revenue itself. That the state didn't do the opposite, which is to cut or repeal the tax because so big a surplus was sitting unused in the bank, tells you everything you need to know about how legislators view your tax dollars-as theirs, no matter what. But at least Tennessee offered a rationale for disobeying Congress. After Oregon's attorney general issued an opinion that the state couldn't transfer money out of its emergency response fund, the governor simply went ahead and did it by arguing "extraordinary" budget circumstances justified the move. Makes you want to tell the IRS that you won't be paying your taxes this year because of "extraordinary" family budget issues.

Politicians love to convert revenues from dedicated taxes into general uses because dedicated levies are often easier to justify to voters who believe (foolishly, it seems) that the taxes will be used as officials claim."