The borough expects this year to pay $110,000 in credit card fees when residential and commercial customers use a card to pay their utility bills — and the assembly believes it’s time the borough stopped eating the cost.

The assembly has directed staff to come back with proposals for how the borough could tack on a fee for credit card payments or come up with another method to transfer the cost to bill payers.

An estimated 65% to 70% of utility customers pay their monthly bills by credit card, Finance Director Rob Marshall told the assembly at their meeting June 29, when the assembly unanimously approved the municipal budget for the fiscal year that started July 1.

The cost to the borough is unfair to the 30% who don’t pay by credit card, Mayor Patty Gilbert said at the meeting.

Assembly Member David Powell questioned why the borough should take a $110,000 hit to its budget.

“Will you note our concerns and bring back some solutions,” the mayor asked the borough manager and finance director.

Staff is working toward presenting a proposal at the assembly’s July 28 meeting, Borough Manager Mason Villarma said in a July 1 interview.

Any change in payments or rates probably would be implemented by an assembly resolution, which would require a public hearing and assembly vote, he said.

The borough already charges a fee of 2.25% for payment by credit card on property tax, sales tax and transient tax on overnight accommodations (also known as a bed tax).

About one-quarter of those taxpayers use a credit card, Marshall said, noting that property tax and sales tax payments are substantially higher than utility bills.

City Hall started accepting credit card payments for the taxes in 2024 under a new online payment platform named PayIt. Utility bills go through an older online platform called BillMaster.

It would take programming work for the vendor to amend the utility bills platform to collect a credit card fee, Marshall said, adding that it would not be as easy as “flipping a switch.”

While more businesses are starting to charge a fee for credit card payments — or offer a discount for cash payments — not all municipalities have switched to charging a fee. Petersburg, Sitka and the City of Ketchikan do not charge a fee; Juneau and Haines charge fees.

The Ketchikan Gateway Borough started charging a 2.5% credit card fee July 1 on sales and property tax payments, water and sewer and service area fee payments. Officials expect the new charge will save the borough about $200,000 a year.

The Wrangell assembly a year ago discussed adding a credit card fee to utility bills but encountered multiple problems in making the change.

Part of the issue is that different departments use different vendors to process credit card payments — and many charge a different fee to the borough. “We are using five different vendors for credit cards,” Marshall said last year.

The Parks and Recreation Department uses MyRec.com to process credit cards; the police, library and Nolan Center use a different provider, Square; and the Port and Harbors Department uses a different vendor, Gravity, he said.

The municipality takes in almost $10 million a year in user fees charged for water, sewage, trash, port and harbors and Marine Service Center services.

Credit card charges paid by the borough over the past three years have run between $109,000 and $120,000 a year.

In addition, the card processing fees charged to the police, the Nolan Center and Parks and Recreation Department are budgeted for a total of $7,500 this year.

The Ketchikan Daily News contributed reporting for this story.