Tampa losing millions as land lines disappear from homes
TAMPA - Rickey Clarke is one of the thousands of Tampa residents who have abandoned traditional landline telephones in favor of their cellphones. “Since I graduated from college and moved back to Tampa, I’ve lived in either a condo or a house. And in both situations, I haven’t had a landline,” said Clarke, 33. “In the days of cellphones, the need for a landline isn’t there.” What’s a convenience for Clarke has become a drain on the city, which taxes telephones and television service to finance city operations. Income from the city’s communication services tax — a 5.22 percent levy on wired phones, wireless phones, cable and satellite TV — peaked at nearly $30 million in 2009. It has plummeted 25 percent since then and continues to drop as a direct result of people changing the way they communicate by:
Switching to services that handle phone calls and TV over the Internet, which the city can’t tax.
Buying prepaid cellphones, which incur sales tax but not the communication tax.
Disconnecting their houses from the traditional phone system, either for economic or technological reasons.
“I think economics and technology are woven together,” said Bob Elek, spokesman for Verizon’s Florida operations. “For certain, some people have dropped their landline out of economic necessity. But if the alternative technology was not there, they wouldn’t do so.”
Between 2009 and 2011, the number of Tampa households reporting they had no phone service rose from just over 3,900 to more than 6,200 — nearly a 60 percent increase, according to the Census Bureau.
The bulk of those households were renters both years, but the number of owner-occupied homes without phone service doubled between 2009 and 2011, the most recent years for which numbers are available.
The sharpest drop in landlines was among those ages 15 to 34, people such as Clarke, who find the landlines redundant in an age when a single cellphone can provide services that used to take a telephone, desktop computer and television.
This year alone, the loss of taxable phone services means Tampa is likely to come up $1.3 million short of the $23.5 million city officials expected to get.
“It’s less reliable than it used to be,” said Sonya Little, the city’s chief financial officer. “It’s something we’re paying attention to.”
For the budget that starts Oct. 1, Little’s staff has revised its phone-tax revenue down again to $22 million. That’s $8 million less than the city received five years earlier.
The communications tax is one of the many streams of revenue the city relies on. This year, it contributes about 12 percent of the city’s operating budget.
The phone tax makes up about a third of the $64 million in taxes Tampa collects on utility bills. The city has used those combined funds as collateral to borrow hundreds of millions of dollars. More than $21.6 million in utility taxes go to repay debt every year.
Rising income from taxes on electrical and water bills could offset losses in the phone tax next year, but the dropping phone income remains a squeeze on the budget.
“In lean years like we’ve been having the past few years, the dollar value means something to us,” Little said.
Tampa isn’t the only government feeling the pinch.
Counties and cities across Florida rely on phone taxes for operations and debt payments.
The money goes from phone customers to phone providers to the Department of Revenue, which sends it back to local governments in monthly payments.
The state levies its own tax on communications. The Legislature funnels those taxes into school construction. That fund has all but dried up as taxable phone and TV services have shrunk.
Last year, legislators created a committee to deal with the loss of phone-tax funds statewide.
The proposals that emerged called for scrapping the tax completely and raising the state sales tax. Legislators didn’t bite.
The Legislature took no action on phone taxes this year, but it may next year.
“Everybody recognizes that something needs to be done,” said Amber Hughes, lobbyist for the Florida League of Cities.
One proposal that may come forward next year would scrap the local piece of the phone tax and distribute a state levy based on population.
Would that approach guarantee that cities such as Tampa keep what little they still have from their phone tax?
“That is a huge issue for us,” Hughes said.
In the meantime, city officials watch their former financial workhorse falter.
The city can’t raise its phone tax rate, which is at the top the state allows.
But Mayor Bob Buckhorn said he isn’t interested in raising the rate.
“I would rather expand our revenue base by growing our economy,” Buckhorn said.