Updated: Sep 14, 2020
There are two different approaches to doing a Fee Study. You can either do a comprehensive study that involves the entire organization or do a more targeted approach that just reviews departments with a large amount of fee revenues. There are pros and cons to each approach.
Comprehensive Fee Study
The main benefit of this approach is that it is comprehensive. This insures that all possible fees are studied and included in the Study and also makes sure that each fee includes all departments that are involved in providing the service. Another benefit is that the comprehensive approach identifies the costs of all services provided by the City, including non-fee tax supported services. This becomes important during the Council presentation because you can now precisely identify the cost of the services that use tax dollars. This now makes real the services that cannot be completely funded due to subsidies provided to services that benefit specific individuals and could be charged a fee. This helps to change the dynamic for the City Council to one of lowering tax subsidies instead of just raising fees.
A con of this approach is that you will spend time, and money, reviewing departments that have little or no fee potential. But this work could be beneficial if it results in new policy directions due to the calculation of the costs of providing the services, such as with Recreation services.
Targeted Fee Study
The main benefit of this approach is that you are focusing your time and money on those departments that have the largest potential benefit of new fees, such as Community Development fees. So, you’re getting the biggest bang for your buck. While this does not identify the cost of the tax services, it still identifies the total subsidy of tax dollars, which allows you to make the general argument about tax dollars supporting tax services.
But, of course, you can’t insure that you have captured all the costs for fee-related services. In other words, you may be leaving money on the table.
Whichever approach you choose, just make sure that you understand what the end product looks like and that it is in line with your fee recovery goals.