Phone tax may end for seniors

City Council considering relieving those 70 and up

$3.50 fee was imposed in August

Money coming `out of the food budget,' Clarke says

December 26, 2004|By Doug Donovan | Doug Donovan,SUN STAFF

Last summer, the Baltimore City Council beat back against Mayor Martin O'Malley's tax package of new telephone, energy and real estate fees, eventually reducing it by $15 million.

Now a newly elected council, which begins in earnest late next month, is contemplating a bill that could further lessen the effect of one of those new fees on a specific category of city residents: people who are 70 or older.

Councilwoman Mary Pat Clarke, who represents the 14th District in North Baltimore, introduced legislation at the council's Dec. 9 meeting that calls for exempting older residents from paying the telephone tax of $3.50 per month. If approved, the exemption for septuagenarians would begin July 1, the start of the next fiscal year.

The phone tax "seemed to me to be a special hardship for retirees on very fixed incomes," Clarke said. "Comes right out of the food budget."

O'Malley's office said the city has not calculated how much tax revenue would be lost under Clarke's proposal.

Clarke's bill has garnered the support of several of her colleagues on the 15-member council and has been assigned to the council's taxation and finance committee. A committee hearing won't be scheduled until the council's next meeting Jan. 24.

O'Malley's original budget plan called for $45 million in new taxes, but that was trimmed to $30 million at the council's urging.

The telecommunications part of the tax package also came under fire from four wireless providers who are demanding refunds, arguing that the tax on their services is illegal.

T-Mobile, Verizon Wireless, Sprint and Cingular Wireless contend that Baltimore is taxing for services outside its boundaries - neither party on a wireless call might be physically within the jurisdiction's borders - and that the levy amounts to a sales tax, which only states are allowed to impose.

"I didn't support this tax to begin with," said Councilman Nicholas C. D'Adamo Jr., who represents the 2nd District in Northeast Baltimore. "Every dollar counts for seniors."

O'Malley spokeswoman Raquel Guillory said the administration has not yet studied the bill and does not have a demographic breakdown on who is paying the tax, which earlier this month had generated approximately $2 million since going into effect in August.

Deputy Finance Director Edward J. Gallagher said he would have more information by the end of the month on how much the tax has generated. He said the council's bill would definitely have a "financial impact."

O'Malley had originally proposed a flat $3.50 monthly fee on cell phones and conventional land lines, to replace a 12 percent tax that applied only to wired phones and averaged $2.22 a month for residents. The 12 percent tax had generated approximately $12 million annually and exempted government agencies and nonprofit organizations.

The council ended up agreeing to the $3.50 flat fee, but to a much lower fee, 35 cents, on the individual phone lines that are part of large phone systems common to corporations and hospitals. Government agencies and nonprofits were no longer exempt. The city estimated that a full year's implementation would generate approximately $21 million.

The city based its estimates on the 450,000 land lines and 350,000 wireless numbers believed to be in operation in Baltimore.

But a new council is taking a second look to see whether the city can afford to offer relief to senior citizens, many of whom are retired city government employees who have seen their health care costs rise while pensions remain flat.

"I have a number of retirees who worked for the city who live in my district," said Councilman Edward L. Reisinger, who represents the 10th District in South Baltimore. "They're hit hard."

Ida B. Williams Ward, a retired state employee who represents 3,000 city and state retirees for the American Federation of State, County and Municipal Employees, said she has fielded numerous calls from members upset with the telephone tax.

"Most retirees are on a shoestring budget living from paycheck to paycheck," said Ward, president of AFSCME's Retirees Chapter 1. "With health insurance going up and co-pays going up, they just can't afford any more taxes."

Ward said she, too, noticed that the tax was responsible for the sudden boost in her phone bill.

"We hope [the council] finds some other way to get the revenues they need rather than taxing the seniors, because they can't afford anything else to be taken out of their paychecks," Ward said.

Walter Jones certainly hopes so too.

Jones, 69, recently retired after 30 years working for the city's Department of Public Works.

"The cost of living is going up, but the pensions are going down and down," Jones said. "We're supposed to be living the good life after working so many years, and right now we're struggling."

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