Opt-In vs. Opt-Out: Change in Madison Round-Up Program Clear Money Grab

My Wednesday post on the proposed change to Madison's electric bill round-up (officially "Step-Up") program has generated some good discussion from all sides. (It's also generated cries of "B.S." and "socialism." :-D ). The poll on the City of Madison website has also drawn attention, with 458 people voting so far. After some remarkable swings, the vote currently (9/19 08:24) stands at 48% for, 52% against. (And that poll is still open, so if you haven't voted, go do it!)

To review the proposal: in 2003, the Madison Central School Educational Foundation got the City of Madison to offer municipal electric customers the option to round up their monthly electric bills to the nearest dollar. The city transfers that round-up amount to the MCSEF, which uses the money to give scholarships to MHS grads who go to DSU.

That scholarship program is a good plan. Youth are key to economic development. As you've read here previously, we'll get a lot better return on our economic development dollar by investing in our own youth, kids with real ties to this community, than in outside companies that flit about the country and world looking for the lowest taxes and cheapest labor.

Unfortunately, after five years, the city and MCSEF have only been able to get 15% of Madison's electric customers to opt into the program and fork over their four bits (average) a month, or about $2500 a year.

So MCSEF proposes one simple change: change participation from opt-in to opt-out. Have the city round everyone's electric bill up to the nearest dollar unless customers call and say otherwise. Sioux Valley Electric's round-up program is opt-out, and it has 70% participation. That level of participation in Madison's Step-Up program would generate over $11,000 annually.

The problem is, that revenue boost would comes not from convincing customers that the money is going to a good cause or even creating a new, better program. Rather, the boost comes from two sources: inattention and guilt. Suppose 25% of electric customers don't even pay attention to the pennies on their electric bill. Switching to opt-out takes money out of their pockets without their noticing. For those who do pay attention, opt-out still counts on guilt to keep people from saying "No."

Think of it this way: I come over to your house. I see some change sitting on your shelf. I pocket the money. (I'll use the money for a really good public project, like developing more features for RealMadison.org!) To suggest that I have a rightful claim to your money until you tell me I can't take it doesn't seem right.

We pay taxes for public functions. The city has decided that supporting the marketing campaigns of the Chamber and LAIC are valuable enough that we all should pay for them with sales tax dollars, with no option to opt-out. I might argue that scholarships to keep good students at DSU would be a better investment of tax dollars than banners and slogans.

If the city feels the effort to keep MHS grads in town is worth public dollars, the city should bite the leadership bullet and declare a tax that everyone will pay for that purpose on all electric bills (or just draw straight from the general fund and let the electric bill be a straight electric bill). If the city feels the MSCEF's scholarship program is worthwhile but should remain a voluntary donation, then the city should keep it as an honest donation, one that does not rely on inattention or guilt to swell to coffers.