eGovEvolution by methyae


									After successfully managing the transition to e-government, the City of Richardson, Texas, continues to add to its electronic service portfolio.

e-Government Evolution: The Richardson, Texas, Experience
By Edward C. Snavely
ditor’s note: Each year GFOA bestows its prestigious Awards for Excellence to recognize outstanding contributions to the practice of government finance. This article describes the 2001 winning entry in the Management and Service Delivery category. longer require interpersonal contact either over the phone or at the customer service counter. Online search results detail a property’s assessed value and the tax rate for the last 10 years, and display the owner of the property, the fair-market value thereof, and any exemptions. Web links direct taxpayers to information on how and where to pay property taxes and to comparative rate data for metro area cities and other taxing jurisdictions. The site also includes contact information for the tax offices of metro counties and the Internal Revenue Service. By the end of 2002, the city expects to be able to accept property tax payments online. At approximately the same time the property tax application was released, officials of the city’s Water Department recognized the need for an online payment system for water utility billing. The department’s goal was to provide an easy way for citizens to pay their water utility bills online. While the IS Department worked to integrate the billing database with a user-friendly customer interface, the Finance Department was busy working out the details of online credit card payments. Integrating the various components of the online payment system, which was designed for maximum security and ease of use, took close to three and a half months, followed by two weeks of testing and debugging. Without leaving the comfort of their own homes, city utility customers can now view a 13-month billing history, link related city accounts, and print and pay bills. The utility billing site also provides useful rate information and instructions for setting up bank drafting and opening, disconnecting, and transferring utility accounts. Once inside the application, users may also e-mail the Water Department with additional questions or work orders. Again, these online features save the city the time that would have otherwise been spent answering routine questions; they also expedite payment processing for the benefit of both the city and its customers. Having gained valuable experience from the deployment of its property tax application, the city worked closely with its merchant processor to provide a secure way for citizens to make payments to the city online, and in real time. The merchant processor acts as an intermediary between the city and the credit card companies. After development of the online water utility application was complete, the city pulled billing data from its server into the database behind


recent study found that the number of Americans accessing information from government Web sites increased by 70 percent over the last two years to 68 million.1 As this number continues to rise, citizens will come to expect more from these sites than basic information on governments and their services. Increasingly, citizen customers want to interact and transact business online with their governments. For the City of Richardson, Texas, where 60 percent of its 90,000 residents are connected to the Internet, moving services online only made sense. This article traces the city’s steps as it evolved from the publishing stage of e-government to the transaction stage.2 Although the process was not without challenges, the addition of electronic service delivery channels such as the city’s searchable property tax database and online payment system has resulted in greater convenience for customers and greater efficiencies for the city.

Toward e-Government
After deciding to provide online services, the city’s first priority was the development of an application that would allow citizens to view property tax information online. The vision for this application included several key characteristics. The database would have to be searchable by owner name, property address, and tax ID number. The search results obtained online would have to be available in both text and graphic formats and include a 10-year tax history for each property. This tax history would have to include a comparison of property tax rates in Richardson to the rates of other area cities. With these goals in mind, the Information Services Department used Lotus Notes’ (the city’s mail server) database capabilities to design and populate a property tax database application for online querying. After two and a half months of development and two weeks of testing and debugging, it was ready for public use. In January 2001, the property tax application became the first to grace Richardson’s Web site. Since its deployment, it has saved time for both taxpayers and city staff because property tax inquiries no 34

the new application and then established a secure link between itself and the merchant processor. As an additional security component, the city does not store any credit card information; the merchant processor handles credit card information for all transactions. In designing the online property tax and utility billing applications, the development team’s objective was to create an easy-to-use interface for both the city and its customers. Although this approach cost more to develop, the added features were well worth the cost. The applications include features such as interactive mailings and notices, viewable histories, and graphic representation of data. Combined, the online applications cost $40,000. However, since the applications were developed and are maintained by the IS Department, the city does not incur maintenance charges, transaction charges, or monthly service fees as do those who employ thirdparty application solutions.

Exhibit 1

Credit Card Acceptance
Online payment processing involves much more than the flick of a switch. The acceptance of credit cards over the Internet raised a number of issues that needed to be resolved before the city could begin receiving payments online. During the development of the utility billing application, the Finance Department concentrated on three main issues surrounding credit card acceptance: (1) credit card fees, (2) the reconciliation of credit card and bank statements, and (3) customer service from the merchant processor. Each of these issues is discussed below. Credit Card Fees The treatment of credit card fees has been controversial for many local governments and should be carefully considered within the context of credit card rules, as well as applicable laws and regulations. Although credit card companies do not allow fees to be passed on to customers, they do allow collection of a convenience fee if credit card customers can avoid the fee through alternative payment methods (e.g., telephone, mail-in).3 This allows governments to partially recover the cost of credit card fees while realizing the benefits of credit card acceptance. These benefits include enhanced customer service, reduced float, greater certainty of collection, and fewer returned checks, among others. By the time Richardson decided to accept online payments, the city had been accepting credit card payments for some time from walk-in customers. For lack of any alternative methods of credit card payments, the city absorbed the associated credit card fees. Even after the online payment system was launched in January 2001, the city continued to absorb the fees to encourage electronic utility payments. Prior to 2001, the city did not accept walk-in credit card payments for property taxes because of a state law requiring that credit card fees be passed on to customers, despite credit card rules to the contrary. The Texas Legislature changed this law in 2001, at which time the city began accepting property tax payments by credit card at the customer service counter. Internet payment of property tax bills will be available in the near future. The city also will absorb the credit card fees for these payments. Although credit card fees typically average around 2 percent per transaction, the fees for individual transactions vary according to the credit card company (i.e., Visa, MasterCard, Discover, etc.), the card type (i.e., standard, corporate, debit, etc.), and the method of payment (over-the-counter, Internet, telephone, etc.). In general, fees are higher for Internet and phone transactions than over-thecounter transactions, since the card is not present in the former and signatures cannot be checked to reduce the incidence of fraud. To ensure that it received the lowest possible fees for credit card processing, the city asked potential merchant processors to submit a detailed fee schedule with their proposals that included both credit card fees and processing fees. Reconciliation The reconciliation of walk-in credit card payments to the monthly bank statement had become a cumbersome routine for the Finance Department, which was concerned that the expected increase in credit card activity from Internet payments would only exacerbate the situation. As such, it was important that the selected merchant processor allowed the city to specify the contents of the monthly credit card statement and to define how the city would pay the processing fees. For the purpose of reconciliation, processing fees needed to be separate from, not netted against, payments received by the city. To this end, the city arranged to have its bank account debited each month for the gross amount of the processing fees. The city required that the monthly credit card statements from the merchant processor describe payment activity in detail. To reconcile the monthly credit card and bank statements, the credit card statements for each location needed to include the daily transaction amount, the total transaction amount for the month, the number and type of credit cards taken, the fees charged for various card types, and the fees charged by the merchant processor. Since the city accepts Visa, MasterCard, and Discover Card payments, it receives a monthly statement from its merchant processor for Visa/MasterCard and processing fees, and a separate statement for Discover Card fees. To ensure accountability and a proper audit trail, the city established separate merchant numbers for each payment location. The water utility billing application, for example, has four merchant numbers—one for the Visa/MasterCard terminal, one for



JUNE 2002


• Determine the scope of your project. • Ensure the security of transactions between you and your financial institution, and between your financial institutions and your customers. • Communicate on a regular basis with all parties involved in the development of online applications. • Determine the method of gathering data and converting that data into a format you want to display to the public. • Decide whether you will use a third-party solution to organize and execute online transactions. • Decide what type of credit cards you will accept online. • Agree upon the method you will use to collect (and whether you will store) customer credit card information. • Choose the kind of financial institution to facilitate online transactions (i.e., bank, credit card company, etc.). • Find out what fees the financial institution will charge for each transaction and for maintenance. • Decide whether you will pass on a percentage of these fees to your customers. • Ask how your financial institution typically transmits data for reconciliation of accounts, and work toward a mutually acceptable format. • Different institutions have different fee schedules and payment requirements, so do not be afraid to inquire and compare details about the organizations you are considering.

Visa/MasterCard Internet, one for the Discover Card terminal, and one for Discover Card Internet. As a result, the Water Department receives four different credit card statements each month. Although this may seem like a lot of merchant numbers and monthly statements, it actually facilitates the monthly bank reconciliation. Separate merchant numbers also facilitates the tracking of dispute and charge-back issues initiated by customers, as well as the comparison of credit card activity for Internet versus walk-in customers. Customer Service Customer service was another important factor in the city’s selection of a merchant processor. One of the city’s requirements was that its merchant processor assign a specific individual to the city’s account who could be reached for assistance when needed. Although the city uses an 800 number for routine matters, a customer manager is available to help the Finance Department with urgent or unusual situations. Since Richardson began accepting online credit card payments, the Finance Department has been in frequent contact with this representative, who facilitates the establishment of merchant numbers, answers questions about the monthly statements, and helps resolve customer disputes and charge-backs.

cials expect that at least one-fourth of all credit card payments will have been received over the Internet by the end of the fiscal year. Customer feedback from the online payment applications has been extremely positive thus far, and the city continues to save time and money by diverting the attention of customer service representatives from payment processing to other value-added activities. Increasing credit card usage also has improved the efficiency of treasury functions by accelerating the availability of funds, improving the certainty of collection, and avoiding the costs of returned check processing. The success of Richardson’s first two online applications has spawned similar applications in other service areas. With each new application, the IS Department has capitalized on previous experience to expedite the development process in order to take new services to citizens more quickly. Other online applications that are currently available on Richardson’s Web site include the following: • Since June 2001, citizens have been able to view and pay fines online for traffic, fire, and health citations through the municipal court application. • Released in July 2001, the animal shelter database displays pictures and information about animals that are currently up for adoption. Customers can create a “wish list,” specifying the criteria for a desired pet. When such an animal arrives at the shelter, the application notifies the customer via e-mail. • The brush and bulky item collection application is an easy way for citizens to schedule additional trash collection, or special collection for large items. • In November 2001, the city deployed an internal application that facilitates the retrieval of archived materials by department staff. • Released in March 2002, the online building permit application allows stakeholders to purchase building permits and schedule inspections online. The development of these applications, and the new design of Richardson’s Web site, has been a joint effort of the IS, Finance, and Water departments. All of the information on the 3,700-page Web site is updated regularly. The new applications are now able to perform many of these maintenance updates themselves, often automatically. As hoped, the amount of staff time required to keep the information on the city’s Web site current has been reduced tremendously.

The Internet is becoming an increasingly important service delivery mechanism for governments. Although the Internet cannot entirely replace direct service delivery, governments can and should consider making many of their services available to customers online. Electronic service delivery is not only more convenient for customers, but it also can save governments time and money and make treasury operations more efficient. With persistence and creativity, governments can overcome the potential obstacles to e-government and realize these benefits.
NOTES 1 Christy Oglesby, “Study: More Americans Become e-Citizens,”, Wednesday, April 3, 2002. 2 Mark Howard describes the three stages of e-government in “eGovernment Across the Globe: How will “e” Change Government?” Government Finance Review 17 (2001): 6-9. 3 Tom Byerly, “Taking Charge: Credit Card Acceptance Issues Challenge Government e-Commerce,” Government Technology, May 2000. EDWARD C. SNAVELY is Webmaster for the City of Richardson, Texas. Snavely holds a bachelor’s degree in electronic engineering from the University of Akron, and is currently pursuing an additional degree in management information systems from the University of Texas, Dallas campus.

Credit card payments have steadily increased since the city began accepting online payments in April 2001. For fiscal 2001 (the city’s fiscal year begins in October), credit card payments totaled $2.47 million, including both walk-in and Internet payments. This represented an increase of almost $1 million, or 65 percent, over the previous year’s total of $1.5 million. Through the first five months of the current fiscal year, the city accepted $1.43 million in credit card payments—an 88 percent increase over the $759,000 collected during the same period last year. This growth in credit card payments is attributed to the new online payment applications. Online utility and municipal court payments accounted for 22 percent of all credit card activity during the first five months of fiscal 2002. City offi-


JUNE 2002


To top