Points

One good thing about being the master of a tiny little domain in government is that I have the opportunity to apply my own personal values and opinions in the formation of public policy surrounding my little world.

The project I work on at the city was started as a pilot program to test the feasibility of taking city payments online. It seems like an obvious idea to improve efficiency and customer service, but everything has to prove its fitness in the real world. For the past three years I have managed the project and watched it grow slowly into a fit, soon-to-be self-funded, well-received corner of city government.

Then, just as I was finishing a forecast showing that in just 12 short months, the project would no longer require any city budget, funding itself solely on the small convenience fees charged on some payments, an article came out in the Chronicle. The article described a photo op the Mayor had been on the previous day at the Department of Parking and Traffic. The article mainly told how the department was a nightmare to visit for any reason, mainly due to long lines and long waits.

Since some of the people were there merely to pay a parking ticket, the question was asked, "why do people have to pay a fee to pay tickets online?". That question had the unfortunate consequence of causing a city official to go (trumpets please) "on record"... as saying that he and the Mayor would try to eliminate those fees. Once on record, my project and its funding became the focus of great scrutiny by those wanting to carry out the Mayor's wishes.

I am one of the only people on Earth who knows this project and its business model intimately. The other person is Marco, my client at the city. He and I unfortunately do not share the same outlook for funding this project. He believes in eliminating fees. I believe in retaining them.

Since I am mainly here to serve his needs as his consultant, pushing my own agenda is something I only do when particularly passionate about a subject.

I have two passions in this case. One is that I truly believe that services should, if at all possible, be paid mainly by those who use the service. The other is that I'd like to see this project continue without struggling for funding. We are just so close now.

My problem became how to try and see my own wishes carried out without causing conflict with my client on this very visible issue.

I wrote up an argument for my case intended for consumption by a city official unfamiliar with my project, someone like a county supervisor. I thought maybe I could get the ideas to them through a third party so that I could remain ostensibly impartial. However, the information is so detailed, I am certainly implicated as its author.

Below were my points:

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Facts:

• The Online Services Group within DTIS processes online payments for several city departments.
• If left alone, the Online Services Group will be self-funded by convenience fees in about 12 months, requiring no additional money from city budgets.
• Convenience fees are small amounts added to online payments to cover processing costs.
• Convenience fees are paid by citizens and others who actually use the online services.
• The Mayor wants to eliminate convenience fees for parking tickets.
• Most Online Services transactions are parking ticket payments.
• About half of convenience fees collected go to project expenses and about half to Visa/MasterCard fees, which are charged as a percentage of the credit card transaction.
• Eliminating convenience fees from transactions will require the city budget and, by extension, all San Francisco citizens to pay for Online Services whether they use them or not.
• 35% of online parking ticket payments are made by non residents of San Francisco.
• Eliminating convenience fees would transfer the entire cost burden of the project to SF residents and relieve the non residents of any costs.
• Eliminating convenience fees is expected to sharply increase online services volume since it would become the cheapest method of payment.
• Larger payment volume means proportionately larger Visa/MasterCard fees and some project expense increase.
• Currently Online Services processes about 10% of all parking ticket payments.
• For the past 3 years, online payment volume has increased at a rate greater than 30% per year, with no changes to convenience fees.
• Doubling the volume to 20%, which is conservative if fees are eliminated, will cost the city about $1 million more than current volume, much of that in Visa fees that would no longer be covered by convenience fees.
• Tripling or quadrupling of online volume over one or two years is not an unreasonable expectation.
• The actual reduction in check processing labor by DPT for a 10% reduction in paper payments is unclear.
• With forecasted growth and economies of scale, convenience fees could likely be reduced over time as costs per transaction fall soon after the break even point around 12 months from now.
• The city contractor that runs online services for the city does not receive a "cut" of the fees. They are paid a flat monthly rate. The city is the only entity benefiting from those fees.
• Eliminating this consistent funding source for the service makes its future less certain as its budgetary worthiness would continue to be reviewed each fiscal year.

Conclusion:

Although eliminating convenience fees from online transactions gives the appearance of making the services more accessible and less expensive to the public, the expense to San Francisco citizens would be much greater overall and threatens the continuation of the service. Alternatively, if the fees were reduced little by little over time, the service is ensured continued growth, assuming DPT continues to use Online Services as a payment processor.

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So far, I have not sent these points directly to anyone influential, mainly to maintain my client relationship. However, I did get to meet yesterday with the city's Deputy Treasurer. Marco and I both met with her to discuss these issues. I was pleased to find that, although I didn't go the meeting intending to split from Marco's wishes, she was clearly receptive to my ideas and I was able to make most of my points, leading her in my preferred direction whenever possible. Since she will be making recommendations directly to the Mayor's budget office, I feel that I have made a real difference.

These types of moments are rare in my world and I have taken note the satisfaction it brings. For all the frustrating, petty, political bickering in this city's crazy government, it feels good to see my own wishes carried out on a relatively large scale.

I'm not sure that alone is enough to keep me around city government too much longer. But we'll see.