New York for decades has collected, under various names, a special tax on mobile phones. The tax, which today shows up on customer bills as the “public safety communications surcharge,” devolved from being a fee to pay for 911 services to a general revenue source with 911 services as a near second thought.

Since 2009, almost half the surcharges paid by customers for public safety communications—more than $1 billion—have been redirected to New York’s general fund.

New York’s License to Skim 

Congress passed the New and Emerging Technologies 911 Improvement Act of 2008 (NET 911 Improvement Act) in 2008, with the aim of improving the technology used for local 911 services.  

The law permits states and their political subdivisions to impose and collect “a fee or charge applicable to commercial mobile services or IP-enabled voice services . . . for the support or implementation of 9–1–1 or enhanced 9–1–1 services. But that fee or charge can only be used to support 9–1–1 and enhanced 9–1–1 services, or enhancements of such services” consistent with rules. 

The following spring New York added a new section to the state tax law for what became the “Public Safety Communications Surcharge.” Despite the name change, it kept the substance of the older “wireless communications service surcharge” that diverted a portion of the revenue to the general fund. 

Tax Law §186-f mandates that exactly 41.7 percent (or 50 cents) of every $1.20 surcharge collected for devices on standard wireless service contracts go into the state’s general fund. A 90-cent surcharge, also subject to 41.7 percent tax-on-a-tax, applies to prepaid mobile phones. Only the remainder—less a 3 percent administrative fee—make it to a special revenue fund.  

The state Budget Division noted, “the purpose of the surcharge is to provide revenue for a variety of public safety purposes that are not specifically designated for the support or implementation of 911 or enhanced 911 services.”

But the Legislature kept skimming money into the general fund, not the special revenue fund. The fraction left for public safety purposes includes $25.5 million per year for the state police, up to $75 million per year to improve interoperability and operability of communications systems among first responders in the state and $10 million for local 911 call centers. 

This is all on top of different surcharges which counties can collect to fund their 911 operations. Under County Law §303 counties my charge up to 35 cents per landline and under Tax Law §186-g counties may charge up to 30 cents per month per wireless device and 30 cents per retail sale of prepaid wireless services (or a higher amount in certain counties with the Legislature’s permission).

FCC: New York Flouts Federal Law 

The NET 911 Improvement Act requires the Federal Communications Commission to report annually on the collection and distribution of fees or charges and to report on amounts states or their political subdivisions spend for any purpose other than 911 or enhanced 911 services. New York has been delinquent from the start of the FCC reporting.

In 2019, FCC Commissioner Mike O’Rielly wrote to the governors of New York, New Jersey and Rhode Island imploring them to stop their states from diverting 911 surcharges. According to O’Rielly, in 2017 those states “diverted the most money in both total funding diverted and on a percentage basis” and “were responsible for diversions of $170.9 million, $94.2 million, and $11.4 million, respectively, of money received.” 

The FCC does not rely on Public Safety Communications Surcharge information that New York self-reports. Rather, the FCC relies on data from the state’s Department of Taxation and Finance. 

Over the fifteen years for which there are data, the state has diverted more than $1.3 billion to its general fund out of $3.1 billion collected. The remaining $1.8 billion (less service provider administrative fees) went into the special revenue fund. And out of that amount, only $10 million per year, or $150 million, was bound by law for 911 services.  

* Less service provider administrative fees up to 2 percent 2010 to 2017 and 3 percent 2018 to present.

Commissioner O’Rielly conceded in his letter that the FCC does not have a way to enforce the law other than withholding federal funding for modernizing 911 call centers. New York was not eligible for grants totaling $115 million under the Middle Class Tax Relief and Job Creation Act of 2012. In 2019, the federal government awarded $109 million under that law – barely more than the over $100 million the state skimmed from its surcharge in state fiscal year 2020. 

Yet in the last three Congresses legislation introduced would have appropriated funding for Next Generation 911 grants totaling $12 billion, $15 billion and $10 billion, respectively. New York’s fee diversion would make it ineligible for grants to implement Next Generation 911 if this or a future Congress passes such legislation. 

Diverting Funds from 911 Upgrades 

Next Generation 911 uses Internet Protocol (IP)-based systems that enhance local 911 services. Improvements include text-to-911 and richer communications via photographs and video, pinpoint location-finding, improved routing to the nearest county-level Public Safety Answering Point (PSAP), and enhanced connection robustness in times of high call volumes. 

To be sure, New York contends that its label for the fee — Public Safety Communications Surcharge — does not limit its use of the funds to 911 services. New York argues that the FCC’s authority extends only to “specifically designated” 911 fees or charges. 

Semantics aside, in fiscal year 2024 the state diverted to its general fund almost $113 million that wireless customers in New York had good reason to believe the state would use for “public safety communications.” And the funds the state spends annually for public safety communications are far less than what it collects from the surcharge. 

The State’s Current 911 Call Center Spending 

In January, Governor Hochul announced $10 million for 911 call centers (PSAP grants) from the public safety communications surcharge. That amount sounds generous on its face. But in testimony before a joint budget committee in 2023, the New York State 911 Coordinators Association pegged the price of upgrading New York to Next Generation 911 at $2 billion over ten years. 

The 911 Coordinators supported a 2023 budget bill that allocated $30 million to 911 call center spending—$10 million for county grants and $20 million for “the creation and operation of a fiberoptic cable based network for [911 call] centers.” The state budget adopted last year kept the county 911 call center grant spending flat and halved the fiber optic network allocation to $10 million. This year’s proposed budget from the governor provided no change that spending. 

Legislation (A5910/S196) carried by Assemblyman Billy Jones (D-Franklin County) and Senator Monica Martinez (D-Suffolk County) would stop the diversion to the General Fund and instead boost the amount available for “grants or reimbursements to counties for the development, consolidation, or operation of public safety communications systems or networks designed to support statewide interoperable communications for first responders.”  The bill does not address increasing 911 call center appropriations or Next Generation 911 investments directly.

For a family of four, the $24 New York diverts annually from their phone bills doesn’t add up to much in terms of making things more affordable. But it’s a good example of the many ways New York nickels-and-dimes families—and potentially fails to deliver the promised services in an emergency.