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Paying a utility bill in Garden Grove just became more expensive.
Residents can now expect to be charged a convenience fee when paying bills or other city fees using a credit or debit card, adding a 2.2% tax or minimum $2 to submit payments for city expenses – a move city officials say is necessary to recover costs for implementation.
Garden Grove City Council voted unanimously in favor of these changes last week.
“I think I’m the genius behind option two,” said Councilman Joe DoVihn during last Tuesday’s city council meeting, referring to the convenience fee option that was adopted by city leaders.
The decision to start charging residents to use a credit or debit card to pay bills happened within a month – as Garden Grove city leaders floated the idea during a city council meeting.
Under the city’s last merchant service contract – which allows for credit card and online payments for city services – more than a decade ago, residents were not charged for using bank cards to pay their bills.
At the March 11 city council meeting, City Manager Lisa Kim clarified to Garden Grove city officials that convenience fees are only applied to residents if a city chooses to do so.
During the same meeting, City Attorney Omar Sandoval said that In the past, Garden Grove city leaders balked at charging residents to use a bank card to recoup annual city costs when paying for utility bills.
In response, DoVihn said other cities and counties implement a convenience fee when using bank cards, and for the city, it is long overdue.
“It’s nothing unusual, and I’m kind of surprised the last council voted it down, which is fine. But I want to vote it up,” he said.
Hiring a contractor to allow for electronic card payments would cost the city $450,000 annually, according to a city staff report.
“This significant cost reduces funding available for other programs that benefit the general population. While providing payment convenience remains a top priority, placing the financial burden on general taxpayers is not the desired outcome,” read the report.
Currently, the city is projected to break even on its roughly $185 million budget.
The report continued “it is highly desirable to pursue cost recovery from customers who directly benefit from the convenience of using debit or credit cards, as is the practice in many neighboring cities.”
Bank Card Fees in Other Cities
Many cities around Orange County apply a fee to residents for using credit or debit cards on city transactions – often referred to as a convenience fee.
Neighboring cities like Stanton apply a 2.6% fee when using a bank card for city fees.
Similarly, places like Newport Beach added a 2.85% fee on debit and credit transactions for city transactions made online effective last September. Huntington Beach also charges a 3% convenience fee for bank cards.
Other larger city agencies, like Santa Ana and Anaheim, don’t add any extra fees.
Some cities with tighter budgets – like Westminster – still don’t charge their residents to use credit or debit cards for utility bills and other city-related payments.
Erin Backs, Westminster’s finance director, said in a phone interview that the city has not begun the process of implementing a convenience fee, despite having the ability to do so.
The city of Westminster’s general fund budget is roughly $88 million – and city officials are currently facing a $2 million deficit.
Hugo Rios is a Voice of OC reporting fellow. Contact him at hugo.toni.rios@gmail.com or on Twitter @hugoriosss.
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