In Clayton, utility customers prefer to pay their monthly bill with check instead of credit card, and the folks at town hall figure that’s because Clayton charges a whopping $3.95 per credit card transaction.
“They stand there and hear the credit card fee and that stops them right there,” said Ann Game, the town’s billing director. “These people are floating. They’re trying to buy themselves some time so we don’t disconnect their services.”
It’s a given in economics that the more a product or service costs, the less people use it. The problem in Clayton is that right many of those paper checks bounce, and according to Town Manager Steve Biggs, one town hall employee spends a third of her time trying to collect the bad debt.
To encourage more credit card use – and less bad debt – Mr. Biggs wants to eliminate the transaction fee and instead tack a few pennies onto every utility bill to cover that $3.95 cost. Specifically, Mr. Biggs wants to tack 11 cents onto the base rates for water, sewer and electricity. That would add 33 cents to everyone’s monthly utility bill, for a total of $3.96 a year. That’s not a lot of money.
But while Councilman Art Holder has no qualms with the town trying to reduce its bad debt, he does have a problem with essentially taxing all utility customers to pay for the checking-bouncing habits of a few. In principle, we agree with Mr. Holder; we’ve never been big fans of the rain falling on the just and the unjust.
But in everyday life, the rain routinely falls on the just – and not always on the unjust. At any retailer, for example, the cost of every product on the shelf reflects the cost of goods lost to shoplifters, who walk out without paying anything.
Unfortunately, with a budget due for adoption soon, we fear the Clayton Town Council will make this decision without all of the information it needs. Does it know, for example, how much bad debt goes uncollected? If bad debt went away, would the employee in charge of collecting bad debt work fewer hours a week and therefore save taxpayers money? If not, what’s the point? Beyond that, is $3.95 a set-in-stone transaction fee, or could Clayton negotiate with its bank or a different bank for a lower fee? Clayton has right much money in the bank, which should give it some negotiating power.
Again, we’d like to know more, but the town council will likely make the decision soon, and we suspect it will go with the town manager’s recommendation. If so, we’d like to see the council adopt the recommendation but pledge to review it at the end of next fiscal year. At that point, if the change is saving taxpayers money, the council can continue it. If it’s not working, then Clayton can go back to charging the transaction fee. It’s really that simple.
As is always the case, the council should do what’s best for taxpayers.