WHEN someone pays a government obligation using a credit card, the government must take a portion of that payment and pay a service fee to the company handling the transaction. For example, if the payment is for $100, the government takes approximately $2 of that $100 to pay the service fee. This means the government has $2 less to use for government functions.
This fee the government pays for a customer using a credit card means all those paying with cash or check are subsidizing those using credit cards for their convenience. The total amount that check and cash payers subsidize credit card payers has grown to more than $4.5 million per year – a significant amount recently noted by the public auditor.
The Fiscal Year 2011 Budget Act required the Department of Administration (DOA) director to contract with a third party provider, effective Jan. 1, 2011, for the processing of credit card payments. This provider was to have the ability to accept credit card payments, but charge the fee to the payer. When it failed to meet this deadline, DOA was granted a three-month extension to put the system in place.
This type of system has been utilized by the Internal Revenue Service and other states and local governments in a similar effort to assist those governments in collecting all the taxes and fees owed to the government, while avoiding any related costs.
Starting Dec. 1, at the call of the governor, the point of service system of accounting for receipt of government payments was discontinued.
The payments received are electronically transmitted and posted to the main accounting database at DOA.
Why the contract for this important financial management system tool was cancelled is beyond comprehension. Millions of dollars in revenue now collected must be manually posted in the DOA accounting system. A clerk or accountant now must enter thousands of transactions previously posted automatically in the accounting ledger. This is a major step backward as it requires either employees to work overtime to keep the posting current, or the reporting of revenue will, in effect, be delayed. Now the government financial management faces difficult control measures and potential audit issues.
I wonder if this is a deliberate strategy on the part of the administration to delay the reporting of revenue collections and shield critical financial information from the Legislature and the people of Guam.
Whatever the reason, it is clear this administration is taking many steps backwards in the efficiency of this government by now having government employees spend endless hours manually entering revenue collections instead of having these transactions processed automatically by a computer. This is not good and efficient use of government resources, and it needs to be fixed right away – especially with the state of government finances as bad as the DOA director and the governor say it is.
In taking the accounting system back to obsolete methods, the governor has done a poor job of implementing the credit card convenience fee processing. For the last two weeks, people have been unable to pay money owed to the government of Guam with credit cards. The ability to use credit cards was halted on Dec. 1, because the government of Guam is transitioning to a new credit card processing vendor.
The establishment of this third-party provider would have saved the government of Guam about $4.5 million a year and would have potentially prevented the discontinuation of processing credit card payments DOA had onerously executed on Dec. 1. Taking a step backwards in a time when the efficient use of government funds and resources are needed shows a lack of progress with this administration.
We must continue to take the necessary steps forward in order to responsibly align the government’s revenues with expenditures. Only then will the government be able to cope with future issues that may arise.