Council OKs one year of using credit cards to pay property taxes

By COLLIN GALLANT on June 3, 2020.

cgallant@medicinehatnews.com@CollinGallant

Hatters will be able to say “charge it” when it comes to paying property tax bills this fall, but some council members are questioning whether the plan for the city to cover potentially hundreds of thousands of dollars in fees is worth the added convenience.

Adding credit card payments as an option for taxes and utility bills has been debated several times over the last decade, and generally found to be too costly.

It was only accepted as a city policy several years ago after administrators found a service provider that could charge fees ranging about 2 per cent that could be charged back to specific customers.

On Monday though, council approved a COVID-19-related relief measures that would see the city pick up those fees in the interest of having more accounts paid sooner and give an extra month to Hatters who are struggling with cash flow.

Three councillors, however, expressed concern that the program would actually benefit those who are financially able to pay full amounts, but would charge amounts in order to build up reward points.

Others said it could help the city avoid a wave of deferrals or the need for long-term tax repayment plans, therefore avoiding cost of managing internal cashflow at the city.

Coun. Jim Turner argued that if the city collects $10 million via credit cards, the corresponding charge to the city would be $180,000, adding costs when the city is looking to cut all unnecessary expenses.

“I don’t think that (city hall) is that desperate to have the cash flow … people will be collecting AirMiles and the rest will be footing the bill,” he told council.

Couns. Jamie McIntosh and Darren Hirsch also opposed the resolution, with Hirsch saying “flexibility” is important, but Hatters will likely move to collect reward points even if they don’t need more time to pay.

“I’m not sure this in the right step,” he said. “In my gut, this feels wrong.”

Mayor Ted Clugston said the reverse is also true; that taxpayers who have the full amount in hand now might use deferral plans to delay or use the cash

“This will hopefully be an incentive for those who can pay to pay early, and or those who are struggling and a credit card allows them another month or frees up cash elsewhere,” he told reporters. “It goes back to ‘nanny state’ and I’m not going to tell people not to use more debt or use credit cards. I’m of the opinion that the residents of Medicine Hat are adults … and can make the appropriate financial decision about the best method for their circumstance.”

The special resolution passed by a 6-3 margin, and will see fees of 1.8 per cent covered by city’s general revenue, if full amounts are paid on or before Aug. 21.

Administrators say the measure is meant to give added flexibility for account holders who are in financial distress, lost their job or saw business income decline due to the COVID-19 pandemic.

McIntosh said that upon reflection, the measure that was meant to be a “lifeline” to struggling taxpayers, could be abused.

Coun. Phil Turnbull said that credit card use is so common that the city should give the option.

Coun. Robert Dumanowski said the program is limited to this year and could give indication of general demand.

Coun. Julie Friesen asked about the city’s cashflow situation, considering that tax deferral programs mean the city will wait an additional three months for payment, and offer utility payment plans of up to 24 months in certain cases.

Administrators said the motion is meant to provide an option for Hatters “when cash might be tight.”

“We (the city) don’t have a cash flow problem, but there is a cost to deferring taxes,” said chief administrator Bob Nicolay.

The idea of allowing residents to pay tax or utility bills with credits cards has been debated several times by council over the past 10 years. Each time though it has been generally rejected as major credit card companies charge vendors a percentage fee to process the payments, and bar them from charging specific customers the related fee.

In the city’s case, it uses a payment company called “PaySimply,” which attaches a 1.8 per cent fee to the specific bill, but also accepts major cards that add 2.5 per cent on average for some services like event tickets, but not on major items, like taxes or utility billing.

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