‘Lifeline’ Tax on Phones Gets Year’s Renewal

A tax on telephone companies to subsidize “lifeline” service for poor people will continue for at least another year despite a $17-million surplus caused by unexpectedly low use of the service, the state Public Utilities Commission decided Wednesday.

Part of the surplus will be used to inform eligible people of the benefits of the low-cost service, the commission said.

Lifeline, available to families with a single phone making up to $11,500 a year, offers service at half the basic monthly rate, and also offers a subsidy of 75 cents a month toward the lease or purchase of a phone. An extra charge is added for more than 30 calls per month.

The program is funded by a tax on phone company revenues. The companies pass the tax on to customers who make long-distance calls within California.

Authorized by the Legislature beginning in April, 1984, lifeline had about 500,000 participants, or 5% of all phone customers in California, at the end of last year, the PUC said.

The tax has generated $36.5 million and the subsidies of phone rates have cost $19.1 million, leaving a surplus of $17.4 million, the commission said.

The commission said it had decided not to reduce the tax for at least a year because of the possibility of running a deficit, at which point the lifeline program would be cut off under the state law.

In addition, Assemblywoman Gwen Moore (D-Los Angeles), whose bill established the lifeline program, has a new bill, AB549, that would change the eligibility standards and possibly increase the cost of the program, the PUC said.

If the cost of the program does not increase significantly, the commission said, it will consider reducing the tax as of July, 1986.