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HomeMy WebLinkAboutRes2012-077 Sponsored by: Hunt r.• CITY OF SEWARD, ALASKA RESOLUTION 2012 -077 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, RESTORING BUDGETED LINE ITEMS TO ACCOUNT FOR THE COST OF CREDIT CARD FEES CHARGED TO THE CITY WHEN CUSTOMERS PAY BY CREDIT CARD WHEREAS, in recent years the City of Seward has made tangible efforts to improve the efficiency of the customer experience by allowing customers to make payments on their City accounts electronically, including payment by credit card; and WHEREAS, in preparing the 2012/2013 Biennial Budget, the City administration intended to pass the cost of credit card fees along to customers, as a way to become more efficient and generate savings to the City's business -like entities, and as a result, eliminated budget funding to pay for credit card fees; and WHEREAS, since then, staff has researched the costs that would be incurred by customers if the City were to require customers to absorb the credit card fees in order to make their payments online or by credit card in person, and concludes that it is not in the City's best interests to make customers pay the additional fee, as it would discourage efficiency, eliminate a common business practice of accepting credit cards which customers have come to expect, and would generate customer dissatisfaction. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA that: Section 1. The City Manager is hereby authorized to continue the practice of accepting credit card payments for City services, with the City absorbing the credit card processing fees rather than passing those fees on to customers. This will not affect payment for taxes, leases, assessments, or any other similar charge which could become a lien against property. In those cases, payment by credit card will continue to be prohibited. Section 2. The 2012 and 2013 budgets are amended to increase the line item for credit card fees as attached hereto in Exhibit A. Section 3. This resolution shall take affect immediately upon its adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, October 8, 2012. CITY OF SEWARD, ALASKA RESOLUTION 2012 -077 THE CITY OF SEWARD, ALASKA Day' Seaway , Mayo AYES: Valdatta, Bardarson, Keil, Shafer, Casagranda, Terry, Seaward NOES: None ABSENT: None ABSTAIN: None ATTEST: 4 " . Johanna CMC ity Clerk (City Seal) p FC 0 c p :_ ft • = SEAL : • ••• g • It • • • 'ti g TE OF .. ••........... Council Agenda Statement of s Fty. Meeting Date: October 4, 2012 9 p Through: James Hunt, City Manager Y g ��������� 4LAS»P From: Kristin Erchinger, Finance Director P Agenda Item: Restore Budget for Credit Card Fees to Avoid Passing on to Customers BACKGROUND & JUSTIFICATION: The City of Seward (City) has made significant strides in automating the billing process for utilities and the harbor, enabling customers to pay their accounts electronically, over the telephone, or by credit card. This service was widely supported by the City's customers, and was initially undertaken with the intent of the City absorbing the cost of implementation, and then later considering whether or not to pass the cost of the credit card transaction fees along to customers. During preparation of the 2012/2013 biennial budget, the administration proposed to begin passing along the credit card processing fees to customers, with the goal of being more lean and saving the City approximately $120,000 in annual credit card processing fees. The budget was passed to eliminate the budget for the City's cost of those fees. Staff began researching the process of switching the charges for credit card processing to customers, and determined that the cost to the customers was, in some cases, significant. It was ultimately determined that it would be best for the City to continue to pay the fees, rather than to eliminate a valuable service that is more efficient to both staff and customers, and that is a widely accepted cost of doing business. An example of the potential charge to the customer: Utility bills — fee of $7.95 per payment DMV, parks and recreation — fee of $3.25 per payment Harbor — fee of $16.25 per payment Miscellaneous — fee of $16.25 per payment Staff did consider the possibility of passing along the fee to customers for some transactions and not for others. Unfortunately, the standard industry practice for credit card processing companies requires that if we accept credit cards, we charge all of the transactions to the City or all to the customer. There is no middle ground. Based on the research done by staff, the administration recommends that the City continue to absorb the cost of credit card fees, estimated to increase the budget as follows: Harbor $43,000; Electric $46,000; Water $4,500; Wastewater $5,500; Police/DMV $1,500; General $15,000; Parking $10,000. INTENT: To maintain the City's current (and past) practice of absorbing credit card fees resulting from the use by customers, of credit cards to pay their bills. This requires a budget amendment to restore budget line items to account for those fees. CONSISTENCY CHECKLIST: Yes No N/A 1. Comprehensive Plan (document source here): X 2. Strategic Plan (document source here): X 3. Other (list): X ATTORNEY REVIEW: X Yes No FISCAL NOTE: This resolution amends the 2012 and the 2013 budgets to increase overall City credit card and banking service fee costs by $125,500. Finance Department: ge RECOMMENDATION: p7� City Council approve Resolution 2012- authorizing an increase in the budget for credit card processing fees, and confirming their support for the City's absorption of those fees rather than passing the cost to the City's customers.