Finding and Funding IT Projects, Part 2: User Charges

User charges make government information services cost more.

User charges raise unnecessary barriers to government information.

Citizens don't like user charges.

User charges constitute double taxation.

You've probably heard all of these arguments before. Indeed, user charges are often deeply mired in controversy.

So why should governments even consider user charges as a funding source for information technology projects? Because -- despite the controversy, despite the opposition -- user charges can make extremely valuable IT projects a reality, and they can often do so in ways that not only quiet the opposition but garner broad support from satisfied citizens. In short, user charges are pragmatically useful, extremely under-utilized, and often simply the right thing to do.

Well Ö Do They?

Do user charges really make government information services cost more?

On the face of it, if a user charge on an information service is a new fee, it will seem to many as though the service is costing more. Let's look closer at some real-world experience, however.

The Information Network of Kansas (INK) is a Web site (at ) with access to several kinds of information and services for a subscription price of $75 per year and nominal statutory fees on particular services.

Businesses or individuals who need these services can still access them, if they want to, the old way. Yet virtually all of the state's banks, for instance, choose to use INK instead. Why? Because transacting online with the state is faster, more efficient, and yes, often cheaper than doing it the old way. No one needs to leave their desk; no one needs to visit a government office. Businesses spread throughout Kansas find they save serious time and money with INK, more than enough to justify the subscription fee. User charges don't make the service cost more; in contrast, the online services made possible by user fees cost less than the pre-existing alternatives and -- because the costs are more visible to clients and service managers alike -- are arguably less costly than online services funded by direct taxation.

Barrier Building?

Do user charges present unnecessary barriers to government information?

Equity and access are major concerns with user charges and should never be taken lightly. However, there are cases where user charges can actually improve access, not hinder it. In INK's case, the Internet removed significant barriers of geography. Another example lies in Ontario's ServiceOntario, a kiosk-based delivery system for motor vehicle information that charges a $1 convenience fee on all transactions. ServiceOntario offers access to service that's convenient to the citizen. Its kiosks are located in accomodating places (like shopping malls) and have convenient open hours (24 hours a day) that are much more useful for citizens than typical government locations and office hours. Web sites and kiosks can greatly expand access to government -- with no special trip required.

Citizens' Thoughts?

Do citizens really not like user charges?

Let's face it -- people want a lot from government but don't want to pay a lot. As a rule, you can always expect opposition when you talk about ways to pay for service. But the reality is that, once great services are in place, they're popular. The same is true for services that come with a user charge attached. INK's first few years saw explosive growth in its subscriber rolls, with growth now continuing via large increases in usage per subscriber. And ServiceOntario shows a customer satisfaction rate of 95 percent.

A key in both cases is citizen choice. Kansas citizens and businesses have a choice about whether to subscribe to INK, just as Ontario citizens can choose whether to use ServiceOntario. Many are willing to pay for the extra convenience. They may not