Council debates billing fees

Published 10:46 am Wednesday, January 9, 2019

During a City Council work session on Monday, Steve Newsome, the city’s director of information technology, reported that Franklin is still on track to offer residents the ability to pay utility and tax bills online by mid-March. Before that can happen, the council must decide whether to continue to absorb the convenience fees associated with accepting debit and credit cards or pass those costs onto taxpayers.

The City of Franklin absorbs all convenience fees associated with accepting credit or debit cards from people who choose to pay their taxes or bills in-person at City Hall. In fiscal year 2017-2018, the city took in $5,570,123 from a total of 26,873 credit and debit card transactions. Doing so cost the city $65,159 in convenience fees that year.

The software that will make online payments possible, which is being developed by the company Edmunds & Associates, is designed to work with the Web Inquiry and Payment Portal credit card processing service, otherwise known as WIPP. WIPP charges 2.95 percent of the transaction amount as its convenience fee for any and all credit or debit cards, and a flat $1.05 convenience fee for electronic checks.

These fees are what residents would pay per transaction if the city chooses to pass those costs onto them.

If the city decides to absorb the new costs associated with WIPP, it would have to pay 2.25 percent instead of 2.95 percent for each debit or credit card transaction and a flat fee of 44 cents rather than $1.05 for each electronic check.

Even with these discounts, continuing to absorb convenience fees once the online billing capability goes live is projected to cost the city $125,328, which is $60,169 more than the roughly $65K it is paying.

“This is an estimate; we have no idea how many residents would use the online bill paying,” said Interim City Manager Clarence Monday.

However, City Treasurer Dinah Babb said that the estimate should be considered to be the lowest amount the city might have to pay, as she anticipates use of debit and credit cards to increase once the capability of accepting online payments goes live. She added that by passing all convenience fees onto residents, the city would not only avoid the additional $60,169, but also free up the roughly $65K the city is spending.

Mark Bly, the city’s director of Franklin Power & Light, suggested a third option, which was to pass a flat fee such as $2.50 onto each customer paying with a debit card, credit card or electronic check, and to continue to absorb the convenience fees.

Another option, he said, was to build the convenience fees directly into the city’s electric rates, which would result in a rate increase.

Councilman Linwood Johnson, however, said he definitely didn’t want to see an electric rate increase at this time. And Monday said that the city’s staff currently has no plans to pursue either option that Bly suggested.

Babb added that building convenience fees directly into people’s bills would not work for taxes.

“It’s against the law,” she said.

To absorb the full $125,328 in estimated convenience fees without passing any of the cost onto residents, the city would need to find funding equivalent to a 1-cent increase in the city’s real estate tax rate, Monday added. However, he clarified that this was only an example to give the council and residents in attendance an idea of how much funding would be needed. No real estate tax increase is being considered, he confirmed.

Regardless of what the council decides, the convenience fees would not apply to residents who choose to continue paying their bills in-person with cash or a check, or who choose to mail their payments.

The council expects to further discuss the matter and hopes to come to a decision at its regular scheduled meeting on Jan. 14.