The District has failed to closely monitor the revenue it collects through its emergency phone fee — a tax the mayor is proposing to double — raising the possibility that the city is accumulating much less than what it is entitled to, according to a recent audit.
The E-911 fee, which subsidizes the Office of Unified Communications, is assessed on every land and wireless phone line in Washington. In his fiscal 2008 budget proposal, Mayor Adrian Fenty seeks to raise the levy from 76 cents to $1.55 per phone line per month to garner an additional $16.8 million a year.
Collected by telephone companies and turned over to the government, the fee generated $12.75 million in 2006 — an inexplicable $927,000 less than in 2005. Burt Smith & Co., the firm that audited the E-911 fund, couldn’t account for the decline, and neither could the city.
“The Office of Unified Communication was unable to provide an explanation for the decrease in the fees since it was not adequately monitoring and analyzing the user fees received from the different telephone carriers,” the audit found.
Meaning the city can’t say whether it is “receiving the user fees it is entitled to receive under the law,” the reviewer found. The accounting mystery was classified in the audit as a “material weakness” — a serious deficiency in internal financial controls.
D.C. Council Member Phil Mendelson, who opposes Fenty’s fee increase proposal, said the question of missing revenue “ought to be answered before they continue with this insistence to raise the tax.”
Two factors contributed to less fee revenue, said Everett Lott, chief of staff in the Office of Unified Communications. First, the number of phone lines has decreased as more people switch to Internet-based service, he said, and there is no mechanism to charge the E-911 tax to those users. And second, Lott said: Verizon turned over $620,000 less in 2006 than it did in 2005 — money the city contends it is due.
Verizon has lost phone lines “in an extremely competitive environment,” responded Harry Mitchell, company spokesman. But its methodology for collecting the fee hasn’t changed.
“We’re not withholding any money from the District,” Mitchell said.
The agency now has a revenue coordinator on staff to review fee receipts and verify line counts.
