Government Agencies in Missouri Spent $2,047,457.28 on Credit Card Fees and $17,940.49 on Late Payment Penalty Charges During 2009
[NOTE: After an article in the St. Louis Post-Dispatch's Political Fix blog covered this entry, and after speaking to an official from the government department in question, Christine Harbin wrote a follow-up entry that contains updated information. — Editor]
As if enough taxpayer money weren’t already going toward banks!
The expenditure for all of Missouri’s government agencies combined increased from $381,553.98 in 2008 to $2,047,457.28 in 2009, which represents an increase of 436.61 percent.
The breakdown between agencies is particularly puzzling. In 2009, the Department of Conservation in Missouri paid $1,818,208 in credit card fees. This represents an increase of 1,141.25 percent from 2008’s expenditure. It dwarfs the amount of credit card fees that the secretary of the state’s office and the Department of Natural Resources paid, which was $183,894 and $30,854, respectively. The amount paid in credit card fees by the other agencies combined was $14,501, which is nevertheless $14,501 too much.
Total of Spending on Credit Card Fees by Agency (in 1,000s)

When I look at the trend of this information over time, I am speechless. What is going on here?
Trend of Spending on Credit Card Fees by Agency (in 1,000s)

I discovered a similarly disturbing trend when I looked at the amount of Late Payment Penalty Charges by government agency. The public safety department spent $17,494.22 in 2009, which represents an increase of 43,168 percent over the previous year! The total for all Missouri government agencies in this category increased from $327,432.60 to $17,940,490 during this period, which is an increase of 5,379 percent.
Total Spending on Late Payment Penalty Charges by Agency (in 1,000s)

In my opinion, this is the quintessential example of government waste and fiscal irresponsibility. The amount of money that the government spends on things like credit card fees and late payment penalty charges should be zero. This figure doesn’t include the amount of products and services that these government agencies purchased. It also doesn’t include the amount of interest that they were charged. This number consists solely of the extra fees that were incurred on government credit cards. Can any of our blog readers explain the dramatic increase in either of these numbers? I’m really interested to know.
I discovered this information while playing with the Show-Me Institute’s recently-launched web tool, “Show-Me: The Spending.” I encourage our blog readers to play with the site and see what else they can uncover related to Missouri’s government spending.


Does Russ Carnahan’s brother also own a substantial amount of Visa stock? I’m just wondering.
Comment by David — February 3, 2010 @ 10:42 p.m.
Christie, this is a great find!
Comment by Abhi Sivasailam — February 3, 2010 @ 10:56 p.m.
My initial guess is that this has something to do with credit cards issued to employees. http://mdc.mo.gov/about/employment/benefits.htm
The department has a credit union. Could that be part of the problem?
http://www.cecuonline.org/
Comment by Audrey — February 4, 2010 @ 9:30 a.m.
This is not only a problem for state agencies, but also businesses of all sizes. Visa, MasterCard and thier big issuing banks collect between 1 and 4% off of every transaction in “swipe” fees, which totaled $48 billion in 2008. I would encourage people with an interest in this to write their Members of Congress here: http://www.capwiz.com/thecreditcardcon/issues/alert/?alertid=14327556&type=CO
Comment by Andy — February 4, 2010 @ 9:42 a.m.
I don’t buy that there’s any problem with credit card “swipe” fees. Businesses can choose not to accept credit cards at all, if they want. The fact that they choose to accept credit cards indicates that the benefit from increased sales that they receive is greater than the cost in lost income of the aggregated “swipe” fees. Credit card companies are providing a convenient service, making it possible for commercial transactions to occur with less advance planning and coordination (i.e., obtaining cash before buying). The prevalence of credit card use leads to marginally higher market prices, but I’m almost universally happy to pay that extra cost in exchange for the convenience that credit cards provide.
Comment by Eric D. Dixon — February 4, 2010 @ 12:47 p.m.
Are these fees that the agency has paid in order to have the privilege of using the card? OR (more likely) are these fees that the agency pays whenever it accepts a credit card payment for goods (as in MDC’s online store – or for that matter, its brick-mortar stores)? You have to know this first, before you can even speculate about why they went up, or down.
Comment by ray — February 4, 2010 @ 1:42 p.m.
[...] CITY – A Show-Me Institute analysis of state government credit card spending during 2009 doesn’t tell the full story, according to state [...]
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