LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session February 2, 2001 TO: Honorable Frank Madla, Chair, Senate Committee on Intergovernmental Relations FROM: John Keel, Director, Legislative Budget Board IN RE: SB201 by Carona (Relating to the authority of certain counties to collect traffic fines through Internet transactions.), As Introduced ************************************************************************** * No fiscal implication to the State is anticipated. * ************************************************************************** Local Government Impact The bill would amend Chapter 130 of the Local Government Code and allow county commissioners courts to authorize the county to collect traffic fines via the Internet. The bill would take effect immediately upon two-thirds vote in each house or September 1, 2001 if the vote is not received. The following agencies and associations were contacted for information on the local government fiscal impact of the proposed amendment: Texas Association of Counties, Bexar County District Clerk's Office, Bexar County Office of the Justice of the Peace #2, Tyler Municipal Court, and the Tax Assessor-collectors Association of Texas (TACAT). Under current statute, a county tax-assessor collector may accept a check or credit card invoice for the payment of certain fees and taxes and may accept payment electronically. The statute allows the tax assessor-collector to charge a handling fee in addition to the amount of the tax or fee collected. MasterCard and Visa credit card companies charge the county a convenience fee, but do not allow the county to pass that fee on to the person paying the tax or fee; therefore, counties accepting these credit cards are absorbing the convenience fee, which ranges from 3 to 6 percent per transaction. If the county contracts with a third party, the third party is allowed by the credit card companies to pass the fee to the person making the payment; therefore, in some instances, the county is able to avoid having to absorb the convenience fee, although there may still be a cost involved for contracting with a third party. The local government entities that are using an electronic system for collecting fees and taxes have had varied experiences with regard to costs. In some cases, there have been no implementation charges; the vendor has provided the software and equipment for no charge, but collects a fee from the contracted third party. If the local vendors do not offer that option, implementation costs between $500 and $1,000, provided the county already has computer equipment. According to TACAT, it is necessary for the computer equipment of the entity collecting the fines to interface with the tax assessor-collector's system in order to confirm no outstanding fines prior to issuing licenses, permits, and titles. An additional one-time software cost would be incurred if interfacing needs to be established. Bexar County collects court-ordered fees via the Internet. While the payment compliance rate has not changed, more people now pay their fees by credit card than prior to having an electronic payment option. The district clerk reports that credit card payments went from $350 per month to $8,000 per month. Electronic payment has reduced the number of checks returned for insufficient funds (NSF), which provides a savings to the county, as does the reduced amount of time staff spends collecting fees in person. The Tyler Municipal Court has been collecting traffic fines via the Internet since March 2000. Collections have increased by an average of 10 percent, with $8,000 to $10,000 collected each month. Electronic payment also provides a cost savings by reducing the number of NSF checks received. Counties would experience a revenue gain as a result of increasing the amount of traffic fines successfully collected. The amount of gain would vary by county based on number and amount of fines issued, as well as compliance by those fined, but is anticipated to reach at least 10 percent. Counties would also experience a cost savings by reducing the number of NSF checks received. Again, the amount would vary by county, but is anticipated to be substantial. Counties would experience a cost of 3 to 6 percent per transaction, depending on their contract and the credit card company, but the cost would be offset by the increase in collections and reduction in NSF checks. Small counties (population under 20,000) and counties in remote areas of the state would not experience sufficient revenue increases to offset expenditures. Source Agencies: 405 Texas Department of Public Safety LBB Staff: JK, DB