The GIS Data Sales Dilemma - Finding a Middle Ground

This article is based on an article by Bruce Joffe entitled "To Sell or Not to Sell: GIS's Budgetary Dilemma", published in GeoInfo Systems, September 1995, Advanstar Communications, Eugene, OR.

THE GIS DATA SALES DILEMMA: Finding a Middle Ground

by Bruce Joffe, Principal

1615 Broadway, Suite 415, Oakland, CA  (510) 238-9771

High-quality GIS data systems cost lots of money to develop and to maintain. In an environment of shrinking government budgets, rising deficits, and a strong political aversion to tax increases, public agencies are adopting

entrepreneurial methods for funding their GIS databases. Many public agencies are charging the public for copies of, or access to, their data. Public agencies that could (and perhaps, should) share GIS data with other agencies are selling their data to try to recapture their development and maintenance expenses. Agencies that are unable to fund GIS development are consigned to inefficient, manual management of geographic data. Those that are unable to fund the update of their geofiles are watching their invested resources grow inaccurate and out-of-date.

Yet, the sale of public data by government agencies threatens to restrict the free access to information, which is a bulwark of our democracy. Public scrutiny keeps our representative government accountable to the people. To investigate whether property taxation is being applied consistently, for example, one would need to examine and analyze an entire database, not just one individual's property record.

A dilemma has arisen: how can GIS databases be made readily available to the public, and how can public agencies raise adequate moneys to build and maintain them?

The Public's Right To Public Data: Freedom of Access to Public Information

Many people argue that the public's right to government data is legally enforceable. The federal Freedom of Information Act (5 U.S.C. § 522), and corresponding open records legislation of many states affirms the public's

right to review any and all information used by government officials in the exercise of their duties and authority. Other advocates add the argument that GIS data should be given to the tax-paying public since they have already paid for it with their taxes.

Public Agency's Ability to Create and Maintain Data: Government's Need for Self-Funded Programs

With the funding for mandated and entitlement programs being shucked from the feds to the states, and from the states to the locals, more and more local government services are being forced to seek a fee-for-service support system. In order to even contemplate spending the money to build a GIS, public agencies must formulate strategies for paying for its maintenance (if not its development) without tax-based support. Without self-funding, many GIS databases would cease to exist. Proponents further justify charging for GIS data as a return on their taxpayer's investment.

The alternatives to this conflict of two valid, defensible, and contradictory principles leads to three alternatives for resolution:

• Fund GIS development and maintenance with taxes

• Fund GIS with fees for usage or the sale of data

• Do without accurate, current, reliable GIS data

GIS Funding Through Taxation

Governments have always shown their genius when devising taxes. It's a necessity in order to sell the funding of public programs. Typical methods include:

 

General Tax to the General Fund

Everyone within the government's jurisdiction pays into a general fund, and the money can be spent on any public project. GIS may get annual funding, or it may be cut during years when the political battle for funding priorities is fierce. While providing a general benefit to all citizens, raising general taxes for GIS means higher taxes for all: not a popular policy with today's politicians.

 

General Tax to a Specific Fund

Everyone pays a tax (such as a bond measure for GIS development, or California's Energy Resources Program surcharge), which earmarks moneys for specific improvements to government activities. GIS may qualify with the specific objectives that the tax seeks to support. While it also results in higher taxes to most people, informed citizens acknowledge the direct benefits that accrue from it.

 

Specific Tax to a Specific Purpose

A specific group of citizens pay the tax, such as the Recorder's property transfer fee, which earmarks moneys for the improvement and maintenance of land records. This is an easier tax to enact because it only raises the taxes for some of the people. Being levied for specific government services, it is like a fee. Specific taxes can provide general benefit to a large group of citizens (e.g., people with real property).

Tax-supported GIS enables government agencies to provide GIS data to the citizen at the cost of duplication, or less. Traditional over-the-counter methods of distribution are being upgraded with direct access through the Internet. If tax support of GIS is politically acceptable, this accrues the greatest benefits to the public.

GIS Funding Through Fees

While charging fees for GIS data raises fundamental questions about the role of government in the marketplace, and the limitation of public access to public data, the fee-for-service mechanism is popular because it does not raise general taxes and it provides money specifically for GIS purposes. Some of the fee-charging mechanisms include:

Fee Paid Up-Front

Many fee structures for GIS data sales separate customers into classes, such as:

• Government agencies (often the price is the exchange of data, or else the cost of reproduction)

• Non-profit agencies (they may be charged the cost of reproduction, including the staff time necessary to extract and format the data)

• Individual citizens inquiring about specific properties (usually there is no charge for small amounts of data)

• Private, or for-profit enterprises (the fee often includes a percentage of the cost of database compilation and maintenance, as well as reproduction)

Some agencies, however, charge a percentage of the cost of database compilation to everyone – even to other departments of the same jurisdiction!

To avoid the politically-indefensible appearance of selling taxpayer financed data back to the taxpayers, some government agencies have evolved a strategy of selling value-added "geoprocessing" services. For instance, San Jose sells a dump of its database for a low price. But, if one wanted a map and data files of selected parcels with certain characteristics, in proximity to other facilities, in a specified format, then they would charge a substantial service fee for processing the data. Ironically, many agencies with high data sales fees do not recover their costs of database construction or maintenance, because they have priced themselves out of the market, and they have failed to reach large numbers of interested buyers.

An aggressive data sales fee could prevent an individual or a public interest group from acquiring the GIS database for purposes of public policy review. A few cities (Seattle and Pittsburgh, for example) have established free public access to GIS data through terminals in libraries, while maintaining a data sales policy. Their terminals allow read-only access with data copy restrictions. However, the need to save intermediate data sets during a complex GIS analysis, and the limited time libraries are open, still cause undue restrictions to public access to data.

Ongoing User Subscription Fee

This is a variation of the "up-front" fee. Some agencies charge a low, but ongoing fee for annual data updates. This helps assure self-funded database maintenance. Some agencies, such as Contra Costa County, charge an initial five year subscription in advance, to raise the necessary start-up funds.

Back-End Royalty Fee

A few agencies are licensing customers to use their database for internal purposes, and charging a royalty fee when the user re-sells the data. This mechanism enables all citizens (including individuals, public agencies, and private enterprises) who have the legal right to public data, to enjoy unfettered access to the data. Yet, when revenues are made through the use, promotion, and sale of the database, the government agency shares in that revenue, to support its GIS development and maintenance. Los Angeles County, for example, charges a fee for its data, and charges the same fee every time a buyer resells the data in turn.

The royalty fee system would work well if the fee for the initial transfer of data is kept low, covering just the cost of reproduction and processing. The low initial fee assures accessible data to the public. A low initial fee also encourages private development of a GIS data market, because the low start-up costs enable more enterprising resellers to find customers for the data. There are so many special interest niches for government GIS data that a single enterprise can not cover them all. After revenues are earned through the re-sale or other profitable use of the data, they would be shared with the GIS agency through the royalty fee.

The royalty fee license actually assures the widest accessibility of public data while providing maintenance revenue to the government agency. For example, Transamerica's MetroScan and TRW's REDI companies collect and repackage county assessor's data so effectively, that their systems are used by the generating county and constituent cities in preference to the countys' own data processing services.

Attempting to find the middle ground between tax-raising subsidy for GIS and access-restricting fees to support GIS, the California Geographic Information Coordinating Council (CGICC) has developed a legislative proposal. Comprised of representatives from every level of government, as well as professional associations, universities, and private businesses, the CGICC proposes to fund GIS development and maintenance through special purpose taxes and resale fees.1 The proposed legislation establishes a fund and an administrative board for the following purposes:

• To encourage and support the sharing of data among public and private agencies.

• To define "framework" databases and database standards (following the lead of the FGDC National Spatial Data Initiative)

• To support the creation and maintenance of framework geographic databases

• To ensure and certify funded databases maintain standards

• To establish a clearinghouse of geographic information products

The CGICC proposes that the State provide grants to fund GIS development and maintenance on an annual basis. The grant fund would be open to both public and private agencies. It would only be available to agencies that form partnerships with other agencies. Funded GIS databases must be publicly available under California's Public Record Act (§ 6250 et. seq.), however, they would not be precluded from licensing the resale of their databases for a royalty fee. The grant fund would be financed from the Energy Resources Program and a surcharge on County Recorder fees.

Several issues are raised by the data sales dilemma that invite continued discussion.

What Data/Services Are Guaranteed Accessible to the Public? Which Are Discretionary?

To ensure government accountability, the public has the right to access government-compiled information that is used for determining public policy. To be easily accessible, public data should be no more expensive than its direct

cost of reproduction or reformatting. "The public" includes individual citizens, other government agencies, private non-profit organizations, and also private for-profit organizations.

However, access to data and the right to copy data are not the same thing. One scholar has observed: "Just as checking out a book from the library does not allow one to duplicate and publish it for resale, access to public

information need not be commensurate with the unfettered right to repackage and resell the computer [database]."2

Extractions and combinations of data may create records that previously did not exist. These would not have been part of the public decision-making process and, hence not subject to public scrutiny. Therefore, many governments are charging market-rates for such "geoprocessing services."

Should Public Agencies Make a Profit, or Even Charge a Fee? What Is the Role of Government in the Marketplace

Generally, government performs those services not adequately fulfilled by the private market to "provide for the general welfare." Many would argue that public agencies should not compete with private companies in the same marketplace. Others assert that government's unique position as the generator and maintainer of its GIS data makes its market position unique.

Another viewpoint observes that the resource of a GIS database should be used as a publicly-financed infrastructure, free and accessible like the road system. Economic benefits accrue from accessible GIS data, such as luring economic development to a city that provides accurate, relevant information faster and more readily than competitive cities.

Others feel that individual "private profiteers" should not receive windfall benefits from the public investment. Many government workers, who may have struggled for years to build their agency's GIS, grow proprietary feelings about the system and do not want to see it simply given away.

What Is the Role for Private Parties?

Private entrepreneurs will discover hundreds of market niches in which to sell and use GIS-based data, far more effectively than a government agency can. Private business knows how to sell and to service the public more effectively than most government agencies. Therefore "free enterprise" distribution of GIS data should be encouraged. GIS data sellers should be encouraged both for the inherent social benefit that comes from the widespread dissemination of GIS data, and for the financial benefit to the government agency from sharing the resale revenues.

Who Should Decide?

These are public policy decisions which should be taken only by democratically elected representatives. Agency staff may make recommendations, but the public policy should be considered in a politically accountable

forum. All too often, however, government bureaucrats develop proprietary feelings about "their" data, and develop data sales policies in the absence of public policy discussion.

1 A copy of the proposed legislation may be obtained from Randy Moory, GIS Manager, Teale Data Center, (916) 263-1886, or E-mail to randy@gislab.teale.ca.gov

2 Lori Peterson Dando, "A Survey of State Open Records Laws in Relation to Recovery of Database Development Costs", 1992, reproduced in URISA "Law and Public Policy" Workshop, 1994.

    Back to top of page