That's the ticket! Lessons learned from Chicago's parking ticket amnesty program.
The most recent economic downturn spared few, if any, governments. In Chicago, city officials quickly recognized the need to generate revenues from nontraditional sources to soften the blow from languishing sales and tourism taxes. Faced with considerable budgetary constraints, the city began searching for new and unique revenue streams to stem the ebbing tide. One of the most productive alternative revenue sources was a parking ticket amnesty program that became the cornerstone of the mayor's plan to address a growing budget deficit.
Between September 3 and October 15, 2002, the City of Chicago waived the penalties on parking tickets issued prior to January 1, 2000. By paying only the face value of these tickets, motorists saved as much as 50 percent on their outstanding balances for parking tickets. Meanwhile, widespread participation in the amnesty program generated almost $9 million in new revenues for the city and significantly reduced receivables.
While Chicago and other governments have achieved remarkable results from amnesty programs, success is by no means guaranteed. This article chronicles how the City of Chicago planned and executed its parking ticket amnesty program, in the hope that governments considering similar programs will benefit from our experience and achieve success in their own right.
DOING OUR HOMEWORK
Chicago's 2002 amnesty program was its first such program since 1987. The 1987 program was a questionable success. The city learned a number of lessons from that experience, and these lessons were carefully considered as planning for the 2002 amnesty moved forward. Chicago also researched the programs of other municipalities, taking cues from their various successes and failures.
Cities have experimented with a variety of different methods for providing breaks to motorists who are delinquent in paying their parking tickets. The simplest involve waiving late fees or reducing the fine to its original value, while the most complex involve calculations based on percentages of outstanding debt and the age of the ticket. The City of Chicago ultimately combined elements of both strategies in its parking break amnesty program.
Amnesty programs are often defined in terms of collection rates. Surprisingly, city officials learned that most amnesty programs in U.S. cities have collected between just 2 and 3 percent of outstanding debt. The most successful programs--those approaching collection rates of 5 percent--were administered by cities that rarely relied on amnesty programs for revenue generation.
Chicago's program proved successful because the public had no expectation of an amnesty. The 2002 program was necessitated by a poor economy, and motorists were put on notice that another amnesty was unlikely in the near future. The length of time between amnesties contributed to the rush of persons wanting to participate in the 2002 program.
Finally, the most successful amnesty programs relied heavily on vigorous public information campaigns. Press conferences were an important component, but they were usually combined with additional efforts. Cities looking to adequately inform motorists of an amnesty consistently looked to radio, television, and print outlets.
FINE TUNING THE PROGRAM
The eligibility rules for participation in the 2002 amnesty distinguished this program from most others. City officials compared expected collections with and without an amnesty program. The analysis concluded that an amnesty would only be profitable if limited to tickets issued between 1990 and 1999. Extending the amnesty to include tickets issued after 2000 would actually result in revenue losses, since collection rates for these tickets (and the associated late penalties) remained very high.
City officials decided that the worst parking ticket scofflaws should be excluded from the amnesty. The message to the most egregious debtors--those owing $5,000 or more in parking ticket fines and penalties--was that the city would not allow them to benefit from their negligence in settling their outstanding debts. There were approximately 1,000 such scofflaws, and each had been previously pursued in the courts. The top 100 were listed on the city's Web site just before the start of the amnesty program. The implication: those debtors now eligible for the amnesty should take advantage of the program to avoid ever-increasing enforcement.
Chicago's approach was novel from the perspective that it included an enforcement component. Prior to the program's implementation, the Revenue Department used the "Denver boot"--a device clamped to the wheel of a vehicle to prevent its operation--to immobilize the cars of motorists with five or more unpaid parking tickets. This changed with the passage of a special amnesty ordinance. To promote participation in the amnesty program (and to improve revenues in the months to come), Chicago lowered the booting threshold to three unpaid parking tickets. Officials hoped this ordinance would encourage motorists on the fence to participate in the amnesty.
GETTING THE WORD OUT
From the start, city officials recognized that the success of an amnesty would largely depend on the extent of the public's awareness of the program and its terms. The city aggressively publicized the amnesty program in newspaper, television, and radio media. Other public information efforts included the following:
* Press conferences at the beginning and the end of the amnesty program, interspersed by weekly press releases documenting program successes to date
* Multilingual public service announcements, including Spanish, Polish, and Urdo for radio and television
* Advertisements in both of Chicago's major market newspapers, as well as a host of smaller newspapers with local distribution
* Posters and flyers in city facilities, storefronts, businesses, taxicab companies, and more than 600 currency exchanges throughout the Chicago area
* Interviews with the director of revenue on television and radio talk shows
* flyers in more than 2 million Chicago mailers
* Modifications to the city's voice response system to alert users about the amnesty program
* Updates to the city's Web site to prominently display program details
* Advertising on scrolling message boards to target motorists on several local expressways
Chicago learned that a winning public information campaign need not be expensive. Advertising is a relatively small investment that can pay big dividends, while flyers, inserts, and posters can be created at little cost.
During Chicago's 1987 parking ticket amnesty, customer service and payment processing resources became overwhelmed. This was troubling to city officials, given that the city did not promote the previous amnesty as aggressively as the most recent one. Clearly, customer service and payment processing resources needed to be bolstered.
The Department of Revenue added six full-time equivalents to the customer service unit during the six-week program. Motorists inquired about their debt and details of the amnesty program by calling the city's parking ticket customer service line. On an average day, the customer service unit handles between 1,000 and 1,200 phone calls. During the amnesty, however, call volumes nearly doubled. On average, staff fielded between 2,000 and 2,200 phone calls, an indication that the public information campaign had worked.
Simply adding staff to address the increased volumes was not itself a panacea. The city reengineered a number of business processes to integrate the amnesty program as seamlessly as possible. Surprisingly, few municipalities realize the potential of technology for successfully executing an amnesty program. Chicago learned from its 1987 amnesty that simple modifications like updating voice response scripts and Web pages are a must, and greatly improve productivity. More complex system enhancements may require a cost-benefit analysis to justify the investment.
Rather than requiring customer service representatives--or, worse, the motorists themselves--to calculate balances based on the new amnesty rate, officials decided to modify the city's parking ticket database to perform this calculation automatically. This saved time and effort for motorists and city staff alike, while sparing both from frustration and possible processing errors.
The city also leveraged the power of the Internet. Eager motorists wanted to contact the city to determine or verify their outstanding parking ticket balances. Rather than limiting contact to telephone calls or in-person visits to city facilities, officials designed a user interface permitting motorists to inquire about their debts over the Internet. The Internet had already become an invaluable part of the city's operations, garnering more than $1 million per month in parking ticket revenue alone. The city expanded this popular tool to allow users to identify amnesty-eligible parking tickets and amounts due by entering the license plate number and the name of the vehicle's owner. The user friendliness of the site and the cost savings were so great that the service became a permanent fixture.
Exhibit 1 demonstrates the immediate success of the online search function. The site received more than 55,000 queries during the first week and 230,000 over the course of the program, another testimonial to of the effectiveness of the marketing campaign. The site provided a convenient link to the existing online payment option, thereby encouraging motorists to pay their tickets immediately.
Web payments during the program surged. More than 50,000 tickets were paid online during the amnesty, an increase of 66.5 percent compared to the monthly average over the summer. Those tickets accounted for $2.7 million in online revenue. Exhibit 2 illustrates the dramatic growth in online revenue collections in September and October 2002.
Revenue officials banked on increased Web use to minimize program costs. Each Web payment represented one less transaction requiring manual processing by the city's lockbox operation--including mail sorting, opening envelopes, and payment application--or one less interaction with a payment service representative. All of the data entry effort occurred at the user level, with credit card authorization and funds deposit taking place automatically in the background. The city did not charge a convenience fee for online payments. The city's own experience had shown that even nominal fees significantly reduce Web traffic--by as much as 30 percent--and increase back-end costs.
For less than $125,000, Chicago coded and tested the required system enhancements and built a public user interface to its database allowing Web searches. If the city were to place a value on the savings realized from the additional functionality, it would likely be six to 10 times the implementation costs.
The success of an amnesty program can be measured in a number of ways. While revenue collection is the most obvious, success should not be measured solely in terms of financial criteria. For example, public interest in an amnesty program is also an important indicator; a program that is neither welcomed nor supported by those affected cannot truly be called a success.
More than 250,000 amnesty-eligible tickets were paid during the program. Direct program revenues approached $9 million, or just over 5 percent of the outstanding debt. The program also generated peripheral revenues. Many motorists not only paid their amnesty-eligible parking tickets, but also tickets issued on or after January 1, 2000. As a result, parking ticket revenues during the amnesty were more than $15 million higher than the same period in 2001 and amounted to more than 14 percent of annual parking ticket collections for the preceding year. As Exhibit 3 shows, amnesty revenues alone exceeded the average monthly parking ticket collections in 2002.
Customer feedback, an important part of the amnesty equation, was overwhelmingly positive. One motorist noted, "You know how you have a weight on your back, an extra burden? Well, I'm now dropping it to the floor." Another acknowledged that "[he] was young and made a lot of bad choices." Another customer proclaimed, "I looked at it like it's my fault because it's my negligence. I was preoccupied with other things." City Hall became a confessional as motorists lined up to take advantage of the program.
Customer feedback from the Internet and telephone was also generally positive. While some wished the city would offer amnesty more often, almost everyone welcomed the program.
City staff went to great lengths to accommodate those wishing to participate in the amnesty, even maintaining late hours at its facilities during the last week of the program. In fact, on the last night of the amnesty, the city kept its doors open until 2 a.m. to serve the steady stream of motorists who had waited until the last minute to participate. Although the lines were long, customers were in high spirits, going so far as to form an impromptu conga line at one facility.
Generating new revenues while providing debt relief to motorists is a difficult balancing act for any municipality to perform. A properly administered parking ticket amnesty program, however, can help a city address these competing interests. An amnesty program is most likely to succeed if: (1) it is the first such program in a number of years and (2) it is supported by a dynamic public information campaign.
Officials looking to execute an effective amnesty should study programs sponsored by other cities. Chicago took this approach, ultimately borrowing elements from earlier programs. Other segments of Chicago's program, however, were unique. Because every city is different, officials must tailor the amnesty to reflect the particular needs and characteristics of their jurisdiction. However, one common denominator of almost all successful amnesty programs is a robust public information campaign. Moreover, governments can ease the burden on staffing and technology resources, while providing a convenient alternative to customers, by leveraging the Internet.
MATT DARST is the managing deputy director of the City of Chicago's Department of Revenue, He has held positions of increasing responsibility since joining the Department in 1995, and now focuses on legislation, contracts, and matters of policy. Darst graduated from the University of Illinois in 1992 and from the DePaul College of Law in 1996.
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|Publication:||Government Finance Review|
|Date:||Aug 1, 2004|
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