1991-009City of Southlake, Texas
RESOLUTION NO.91-09
A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF SOUTHLAKE, TEXAS, AUTHORIZING
USE OF CREDIT CARD PAYMENT ON CITY FINES,
COURT COSTS, UTILITY BILLS AND OTHER CHARGES
AS A METHOD OF PAYMENT; PROVIDING AN
EFFECTIVE DATE.
WHEREAS, Section 132 of the Local Government Code
provides that a municipality may authorize the use of credit
cards for payments of City charges; and,
WHEREAS, the use of credit cards would provide a
convenient service with little or no cost to the City; now,
THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
SOUTHLAKE, TEXAS, THAT:
Section 1. The above premises are hereby found to be true and
correct and are incorporated into the body of this resolution as
if copied in its entirety.
Section 2. Municipal officials who collect for, fines, court
costs, utility bills, and other charges may,
a) accept payments by Credit Card of said fee, fine,
court cost, utility bill, or other charge,
b) collect a fee for processing the payment by Credit
Card.
Section 3. Prior to accepting use of Credit Cards for payment of
charges, the appropriate City Staff shall solicit requests for
proposals for credit card service from financial institutions or
other companies providing such service.
Section 4. This resolution is hereby in effect upon passage by
the City Council.
PASSED AND APPROVED this the Ir day of I&
CITY OF SOUTHLAKE, TEXAS
By:
ry Fi'ckeA, ayor
City of Southlake, Texas
Resolution 91-`09
pagetwo
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ATTEST: ' ;~•'-......r•' .`
TAandral. LeGrand
City Secretary
APPROVED AS TO FORM:
City Attorney
City of Southlake, Texas
CITY & COUNTY-
November
OUNTY
November 1990 Bob Bullock, Texas Comptroller of Public Accounts
Cities and counties can accept credit cards...
Fines) ftaxes?
Charge it)
ities and counties can now accept credit
cards for payments of fines, fees, court
costs, property taxes, utility bills, car fees
and taxes and other charges.
It may well be worth your while to accept plastic
instead of cash. Here's why:
Your bad debt/hot check problems diminish;
Your outstanding delinquent taxes may de-
crease;
There is little or no cost to the city/county;
It's good taxpayer service: it's convenient for
people who cannot come up with instant cash
to pay for fines, property taxes, utility bills, etc.;
It can be an additional source of revenue if
cities and counties work with credit card com-
panies to seize bad credit cards, and
It may be faster than accepting checks, because
a machine can verify the credit card at the
same time payment is made, eliminating check
deposit clearance time.
Although the legal authority to accept credit
cards has been on the books for three years, the
Comptroller's Local Government Division is aware
of only three jurisdictions that presently use credit
cards—the Austin and Fort Worth municipal
courts and the Travis County tax office.
We've been accepting credit cards for just over a
year, and it's worked out beautifully," said Cecelia
Burke, Travis County Tax Assessor -Collector. "It's
speeded up collections and eliminated a lot of bad
check hassle and it's really appreciated by a lot of
our taxpayers who don't have the ready cash."
Burke said that her office hasn't had any real
problems with accepting credit cards. "We can't
come up with any 'cons'—it's all 'pros'. It's really a
winner for the taxpayer, my office and the county."
The Travis County Tax Office accepts credit cards
for property taxes, motor vehicle registration fees,
motor vehicle sales taxes, occupation taxes, motor
vehicle title transfer fees and license or permit fees
under the Alcoholic Beverage Code.
Burke and her office staff provided some of the
information in this report, and are happy to talk
to other cities and counties that are interested in
v
offering credit card payments to their taxpayers
and customers.
The Austin and Fort Worth municipal courts
have accepted credit cards for just a few months. .
They also have favorable reports, and are very
willing to discuss their experiences (see box on
page 2 for names and phone numbers).
We'd also like to hear from other city and coun-
ty offices that accept credit cards. We are prepar-
ing an in-depth report on who uses them and the
experiences they have had.
This report discusses the basics—legal authority,
handling the processing costs and so on.
Legal authority to accept plastic
The general legal authority for cities and counties
to accept credit cards is in the Local Government
Code, Chapter 132.
It says that the city council or county commis -
See page 12
City & County Financial Management. November 1990 11
Continued from page 11
sioners court may authorize city/county officials
who collect "fees, fines, court costs or other
charges" to accept payment by credit card and to
collect a fee for this service.
There is also specific authorization for the coun-
ty tax assessor -collector to accept a credit card (or
check) for the following charges (Local Govern-
ment Code 130.002):
1) motor vehicle registration fees;
2) motor vehicle sales taxes;
3) occupation taxes paid to the assessor -col-
lector under Chapter 191, Tax Code;
4) motor vehicle title transfer fees under the
Certificate of Title Act,
5) license or permit fees under the Alcoholic
Beverage Code and
6) property taxes.
Specific authority was needed for the county
tax official in order to extend the credit card pay-
ments to the various state fees collected by that
official. Cities may collect local taxes under the
broader authority of Chapter 132 of the Local
Government Code.)
Processing fees
Most of the additional cost of accepting credit
cards is the fee charged by the bank. This can
range from 1 to 5 percent or more. The law
allows your city/county to recover the additional
costs by charging a processing fee that is reason-
ably related to the expense incurred in handling
the credit card payment.
The processing fee must be set by the governing
body and may not exceed 5 percent of the
amount charged.
In order to get the best deal for your taxpayers,
you'll want to shop around among financial insti-
tutions that offer credit card services, and talk with
other local governments that have credit card con-
tracts. You may go out on bids foi credit card ser-
vices.
Here's an example of figuring the processing fee.
A citation is issued by a city police officer for
one violation that is punishable by a fine of $200
or less. The defendant pays in a timely manner
with a credit card.
Fine 200.00
State court costs 12.50
Arrest fee 5.00
Total due 217.50
5 -percent city processing fee for
credit card payment: .05 X $217.50 10.88
Total charged 228.38
Note: Make sure that your contract with the bank
stipulates that the bank's fee is figured on the
amount due before the city/county processing fee
is added on. Otherwise, you may lose money. In
this example, if the bank figures its fee as .05 X
228.38, it'll charge you $11.42, but you'll collect a
processing fee from the defendant of only $10.88.
Banks normally provide adequate supplies of
printed forms for charges, credits, deposits and
other transactions. They also provide imprinting
12 November 1990 City & County Financial Management
machines for the charge/credit slips.
What about bad credit?
Bad credit is normally not a problem. Once a
charge transaction has been authorized by the
credit card company, usually by phone or by a
special machine linked directly to the credit card
company, the city/county has its money. If the
taxpayer doesn't pay the credit card bill, the bank
assumes the collection burden.
However, if for some reason a charge transac-
tion is not honored by the credit card company,
the city/county may collect an additional service
fee from the person who owes the money. The
amount of this service fee is set by law at the
amount the city/county charges for hot checks.
Seizing credit cards creates revenue
The law also allows cities and counties to contract
with the credit card company to seize its credit
cards that are outdated or otherwise unauthorized.
The county or municipality may charge the credit
card company a fee for the return of the credit
cards. The law does not set this fee; it should be
negotiated with the credit card company.
Good taxpayer service
Accepting credit cards instead of checks or cash
may mean a little more paperwork, but there
should be very little additional cost. And it can
be a valuable service to taxpayers in your areas,
especially for those who can't find the cash to pay
property taxes or unexpected fines.
One of the benefits of accepting plastic money
may be that taxpayers are more apt to pay what
they owe to the city or county, especially if they
can just whip out the plastic and say, "charge it!"!
For more information: See the "Special Thanks"
box on page 2. And call the Comptroller's Local
Government Division, Toll-free 1-800-531-5441,
extension 3-4679. A