NCPA - National Center for Policy Analysis

Governments Going Online, Belatedly

June 19, 2000

Governments at all levels are trying the Internet as a way to improve service and reduce costs.

  • Experts estimate that federal personnel could be cut by 25 percent over 10 years.
  • For-profit dot-coms are springing up to help state and local governments put driver's license renewals, court filings and building permits online.
  • Although federal, state and local government transactions reach upward of $1 trillion a year, less than 1 percent of them occur online.
  • States and localities are contracting with private firms who will do the set-up for free -- and then charge a set fee per transaction once the system is up and running.

When IBM put Arizona's vehicle registration program online, the average wait to register a car fell from 45 minutes to three minutes -- and the cost to the state plummeted from $6.60 per car to $1.60. Arizona's Motor Vehicle Department now saves about $1.25 million a year. IBM keeps $1 for each online registration -- as well as a portion of the fee charged by banks for credit card processing.

By one estimate, governments save up to 70 percent every time they move a service online.

Source: Jeffrey H. Birnbaum, "Death to Bureaucrats, Good News for the Rest of Us," Forbes, June 26, 2000.


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