WASHINGTON-The mobile-phone industry-already facing the prospect of new rules and hefty fines in trend-setting California-suffered a major setback last week with the announcement that enough signatures were collected to put on the November ballot a new 3-percent cell-phone tax to help fund 911 upgrades and medical care in the state.
Whether California voters will approve the initiative is uncertain, given the mood in a financially strapped state led by a highly popular governor who won last fall’s recall election on an anti-tax/pro-business platform.
Indeed, a major financial backer of the ballot measure-the California Healthcare Association-said it pulled out of the Coalition to Preserve Emergency Care after polling showed the initiative did not fare well with the public.
“The political environment is very different after the recall … The public doesn’t have any appetite for any new taxes,” said Jan Emerson, a spokeswoman for CHA.
Kelly Hayes-Raitt, spokeswoman for the Coalition to Preserve Emergency Care, disputed Emerson on that score. Hayes-Raitt said it was her understanding that CHA is re-evaluating its position insofar as its level of support for the initiative going forward.
Last Monday, the emergency-care coalition said it obtained about 1 million signatures for the initiative, nearly twice the number needed to get it on the election ballot this November.
Meantime, an opposing group-funded by telecom carriers and headed by Republican strategist Mike Murphy-began airing radio ads last week criticizing the emergency-care measure. In addition to heading Californians to Stop the Phone Tax, Murphy is the top political adviser to Republican Gov. Arnold Schwarzenegger.
Murphy’s political consulting firm-DC Navigators-has offices here and in Sacramento, Calif. Questions recently have been raised about Murphy’s claim of having a “near Chinese wall” dividing political advice-giving from lobbying.
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Todd Harris, a spokesman for Californians to Stop the Phone Tax and a partner of Murphy’s at DC Navigators, said Murphy does not lobby the governor. Harris was Schwarzenegger’s spokesman during the gubernatorial recall campaign. Margita Thompson, formerly with California-based lobbying powerhouse TechNet, currently serves as press secretary to the California governor.
“We’re going to run an aggressive, well-funded campaign to educate Californians about this ridiculous notion that there should be a $540 million tax on talking, ” said Harris.
Supporters and opponents of the emergency-care phone-tax proposal are spending millions of dollars in the ballot battle.
Earlier this month, Cingular Wireless L.L.C., awaiting federal regulatory approval of its $41 billion bid to buy AT&T Wireless Services Inc. and battling a record $12 million fine levied by California regulators, contributed $1 million to Californians to Stop the Phone Tax. In March, SBC Communications Inc.-60 percent owner of Cingular-threw a cool $5 million at the cause.
Mobile-phone carriers have been forced to split their financial outlays in the state between a proposed consumer bill of rights they want to defeat, and now, a 3-percent phone tax ballot initiative they disdain. California wireless lobbyists are having a field day.
Hayes-Raitt said the level of telecom industry funding “just shows how desperate they are to defeat” the emergency-care measure. “I think it’s important that voters ask why these telecom companies don’t want emergency care in California,” said Hayes-Raitt.
California’s dire fiscal situation is not unique. Other states facing budget deficits have targeted the mobile-phone industry for revenue-raising purposes. Voters do not always have a say in the matter as they will in California. Some wireless taxes are pushed through state legislatures, and mobile-phone subscribers only find out when they receive their monthly bills.
Verizon Wireless, the nation’s No. 1 mobile-phone operator, last month took its fight against a state tax to the South Dakota Supreme Court.