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GG 21
Increase Usage of Online Government Services

Summary

TexasOnline is a Web-based “portal” supported through a public-private partnership that provides 37 services online to state and local governments and citizens. Agency initiatives to market these services could improve citizen access to government services while increasing state revenues. Agencies should provide a link for TexasOnline on the front pages of their Web sites and should describe online service options in agency mailings.

Background

TexasOnline is a Web-based “portal” for transacting business with the state. The site is a self-supporting online government service, developed in partnership with BearingPoint, formerly KPMG Consulting, managed by the Department of Information Resources (DIR) and maintained at the West Texas Disaster Recovery and Operations Center in San Angelo. The 2001 Legislature created the TexasOnline Authority, headed by a DIR staff member, to create a common electronic infrastructure for online government.[1]

The private sector is delivering more goods and better services to customers at a lower cost, and taxpayers have come to expect this same kind of performance from their government. TexasOnline meets this expectation by providing its users with information from state agencies and local governments and delivering services such as driver license and motor vehicle registration renewals, license renewals, taxes and fine payments and other services.

The state contracted with BearingPoint to begin developing TexasOnline in May 2000. When the portal was launched in September 2000, it received about 40,000 visits monthly. Now it receives roughly 1 million visits per month.

As of August 2002, TexasOnline had attracted more than 12 million visits, facilitated 8.4 million transactions and collected $249 million in state funds. Even so, the site is still in its infancy and can accommodate any Texas state agency or local government that wishes to participate.[2]

State revenues

TexasOnline’s private partner, BearingPoint, has invested about $23 million in establishing the portal infrastructure. BearingPoint is recovering its costs through a combination of user, subscription and premium service fees. The state receives 10 percent of the transaction fees generated by TexasOnline applications.

Projected deposits to the General Revenue Fund for the four years from fiscal 2003 through fiscal 2006 are $1.6 million, $2.6 million, $4.6 million and $6.8 million respectively. BearingPoint projects that it could recover all its investments by the end of fiscal 2005, after which an additional 50 percent of net fee revenues will be added to the state’s share. This would add an additional $9.1 million to the fiscal 2006 revenue projection.[3]

Service adoption rates

In September 2001, TexasOnline began tracking and projecting adoption rates—that is, the percentage of eligible transactions actually conducted online—for its various services (Exhibit 1). Projections take into account factors such as:

  • adoption rates of similar applications;
  • seasonal adjustments for applications that have peak renewal periods;
  • agency goals and commitments to marketing the service;
  • forecasted budgets for marketing new applications; and
  • actual adoption rates.

TexasOnline revenues are directly related to adoption rates and transaction volumes. Its budget is partially based on projected revenues, which include certain assumptions about anticipated adoption rates for available services.[4]

Exhibit 1
Projected Adoption Rates
For Selected TexasOnline Services

  Fiscal Year
State Agency 2002 2003 2004 2005 2006
Comptroller of Public Accounts
  Sales tax 0.5% 2.0% 3.0% 7.0% 10.0%
Railroad Commission
  Drilling permits 0% 10.0% 10.0% 30.0% 40.0%
Parks & Wildlife
  Hunting/fishing licenses NA 90.0% 95.0% 100.0% 100.0%
Department of Public Safety
  Driver's license 3.0% 30.0% 30.0% 35.0% 40.0%
  Driver's license duplicates NA 10.0% 30.0% 40.0% 50.0%
  Driver's records NA 100.0% 100.0% 100.0% 100.0%
  Other NA 1.0% 10.0% 20.0% 30.0%
Department of Transportation
  Motor vehicle registrations 0.5% 0.5% 1.0% 2.0% 3.0%
Source: BearingPoint.

Marketing pays

Marketing and communications are the key elements needed to expand TexasOnline and increase state revenues from the portal. In September 2000, a governor’s press conference tripled the number of visits recorded in the following month. A public service announcement campaign running from July 2001 through December 2001 doubled visits over the period. In a 2002 TexasOnline survey of its users, 72 percent said they found out about TexasOnline through renewal notices or newsletters from an agency providing a service through the Web site.[5]

The Texas Department of Public Safety (DPS) increased adoption rates for online driver’s license renewals by including fliers in its license renewal mail-outs highlighting the convenience of the online service. This helped triple the number of online applications it received, from 7,000 in June 2001 to 22,000 in January 2002.[6]

Online vehicle registrations through the Texas Department of Transportation (TxDOT) have an even better online potential; only about 3 million driver’s license renewals come due each year, compared to 17 million vehicle licenses. TxDOT mailed fliers marketing its online vehicle registration option between April 2002 and June 2002 and saw volume quadruple, from 5,000 to 20,000 per month. Although TxDOT acknowledges that its fliers were effective, it discontinued the program due to its costs and the unavailability of the online option in much of the state. (At present, the service is available in fewer than 40 counties.)[7]

In 2001, BearingPoint projected that adoption rates for vehicle registrations would be just 0.5 percent for fiscal 2002 and 2003 (Exhibit 1). The actual adoption rate was 0.6 percent in 2002, slightly higher than BearingPoint’s projection, due to the three-month period in 2002 in which TxDOT included TexasOnline fliers in its registration renewal mail-outs.[8] Without such publicity, it will be difficult to let the general population know about the service.

The TexasOnline Authority considers vehicle registrations to be a local government service; therefore, the state does not receive 10 percent of the transaction fees. While motor vehicle registrations are the responsibility of county tax assessor-collectors, TxDOT plays a key role by sending out all renewal notices and by developing an advanced computer application program that will allow all 254 counties to renew licenses through the portal beginning in spring 2003. For these reasons, the TexasOnline Authority is considering reclassifying this application as a state service.[9]

As previously mentioned, agencies are required to link their Web sites to TexasOnline. If they were required to include the TexasOnline Web address and, if possible, the TexasOnline logo on the front pages of their Web sites, TexasOnline traffic almost certainly would increase. This would improve citizen access to important government information and increase transaction volumes and adoption rates for online services.[10]

Reduced agency costs

Increases in online service delivery and transactions also benefit agencies due to improved efficiencies, quicker service delivery and a smaller possibility of errors.

For example, the Comptroller’s WebFile project, which allows sales tax filers to pay taxes online, reduced the agency’s online transactions costs after the first year to just 78 cents per tax filing, compared to mail and walk-in transaction costs of $2.72.[11] DPS and the Texas Education Agency have found that the average processing time for online transactions is more than 90 percent faster than for offline transactions.[12] And the Texas Department of Insurance’s online program for agent license renewal corrects data entry errors automatically during the application process, reducing the number and percentage of errors that staff members otherwise would have to correct.[13]

Recommendations

A. State law should be amended to require all state agencies to post TexasOnline’s Web address on the front page of their agency Web sites.

While agencies with generally accessible Internet sites already are required to include an electronic link to TexasOnline, a front-page link, preferably with Texas-Online’s logo, would make information and services on the portal more readily available to the public.

B. State law should be amended to require agencies with TexasOnline services to assist the TexasOnline Authority with their marketing.

The Texas Department of Transportation (TxDOT) and other agencies providing services through TexasOnline should be required to include online service options in mail-outs to the public.

C. The TexasOnline Authority should reclassify motor vehicle registrations as a state service.

The Authority is considering a reclassification based on the state’s central role in the process.

Fiscal Impact

Recommendation A could be implemented with existing agency resources. The recommendation should increase portal visits and transaction volumes, but the amounts involved cannot be estimated.

Recommendations B and C could be implemented with existing resources. Agencies already pay for the mailing of renewal notices, and could add information on Texas-Online options to existing notices at no additional cost. Agencies also could include separate fliers to market the portal; any additional costs would be offset by reductions in transaction costs and errors as online adoption rates increase.

Mail-out fliers dramatically increased the adoption rate for online motor vehicle registration services at TxDOT and for online driver’s license renewals through DPS. The estimate assumes that including online service options in mail-outs for these and other services would at least double the adoption rates currently projected by TexasOnline.

The online transaction cost for motor vehicle registrations is $2. The state would begin receiving 10 percent of these revenues if the TexasOnline Authority reclassifies vehicle registrations as a state service. State revenue would increase by 20 cents for each of the 17 million vehicles renewed each year.

Fiscal Year Current Adoption Rate Projections Increased Projections with Mail-outs Number of Online Renewals Projected Revenue with Mail-outs State Share (10%)
2004 1% 2% 340,000 $ 680,000 $ 68,000
2005 2% 4% 680,000 $1,360,000 $136,000
2006 3% 6% 1,020,000 $2,040,000 $204,000

In addition to the 10 percent share of TexasOnline revenues, the state will begin receiving an extra 50 percent of net revenues once BearingPoint’s investments have been paid off. Based on current projections, this additional revenue would begin in fiscal 2006 at $9.1 million, which is 34 percent more than the projected 10 percent share ($6.8 million). It is assumed that these net revenues would increase the state share of additional revenues generated by Recommendations B and C in the same proportion. Therefore, beginning in fiscal 2006, the state share of revenues generated by increased marketing would include both the 10 percent share ($204,000) and the 50 percent of net share ($204,000 plus 34 percent of $204,000 equals $273,000). The total state share in fiscal 2006 would be $477,000 ($204,000 plus $273,000).

Adoption rates for 2007 and 2008 are likely to increase beyond 2006 levels, but TexasOnline has not established projections for these years, so the estimate employs the 2006 rate. Increased adoption rates should improve the efficiencies of state agency operations and result in reduced transaction costs, but the amount of agency savings cannot be estimated.

Fiscal Year Gain to General Revenue
2004 $ 68,000
2005 $136,000
2006 $477,000
2007 $477,000
2008 $477,000


Endnotes

[1]Texas S.B. 187, 77th Leg. Reg. Sess. (2001).

[2]TexasOnline Authority, TexasOnline: A Status Report on the Progress and Efficiencies Gained (Austin, Texas, September 1, 2002), p. 6; TexasOnline Authority, TexasOnline 2003 Budget, Executive Summary (Austin, Texas, October 2001), p. 1; and materials provided by Gary Miglicco, managing director and national director for e-government services, BearingPoint, Austin, Texas, July 24, 2002 and October 9, 2002.

[3]Materials provided by Gary Miglicco.

[4]Materials provided by Gary Miglicco.

[5]Materials provided by Gary Miglicco; and TexasOnline Authority, TexasOnline: A Status Report on the Progress and Efficiencies Gained, p. 23.

[6]Telephone interview with Jim Templeton, project manager, Driver’s License Division, Texas Department of Public Safety, August 9, 2002.

[7]Telephone interview with Darryl Hunt, deputy director, Vehicle Title and Registration Division, Texas Department of Transportation, August 9, 2002; telephone interview with Phil Barrett, director, TexasOnline Division, Texas Department of Information Resources, August 25, 2002; telephone interview with Jim Templeton; and materials provided by Diane Emrick Dotson, special projects administrator, Texas Department of Transportation, September 10, 2002.

[8]Telephone interview with Diane Emrick Dotson, Special Projects administrator, Vehicle Title and Registration Division, Texas Department of Transportation, September 10, 2002.

[9]Telephone interview with Phil Barrett, August 25, 2002.

[10]Tex. Gov’t Code §2054.125, and telephone interview with Phil Barrett, director, TexasOnline Division, Texas Department of Information Resources, September 6, 2002.

[11]Texas Comptroller of Public Accounts, Sales Tax Benchmarking Analysis (Austin, Texas, July 17, 2002), pp. 3-6.

[12]TexasOnline Authority, TexasOnline: A Status Report on the Progress and Efficiencies Gained, p. 41.

[13]Texas Department of Insurance, Agent License Renewal Benchmarking Analysis (Austin, Texas, July 1, 2002), p. 6.