New state office to target La. debt collection
BATON ROUGE, La. (AP) - A new state agency is being created to beef up Louisiana's efforts to collect delinquent accounts owed to the state.
Lawmakers who overwhelmingly agreed to set up the Office of Debt Recovery are hoping to drum up new dollars for the treasury in a state struggling through six years of budget woes.
Gov. Bobby Jindal supports the bill from the recently-ended legislative session and is expected to sign it into law. Rep. Chris Broadwater, R-Hammond, who spearheaded the effort, says dollars should start rolling in with the new fiscal year that begins July 1.
Estimates are the measure could generate as much as $200 million over five years. Broadwater said the state is expected to receive $20 million to $30 million in the 2013-14 fiscal year as the new office begins its work.
"I'm hopeful that we will see at least that and hopefully even more," he said.
With the first slices of back-owed debt collected under the new system, up to $5 million from any tax debts will go to the Louisiana State Police to train new troopers. The money is allocated that way for the first five years of boosted debt collection efforts.
The debt recovery office will be housed in the Department of Revenue and will work in collaboration with collection efforts in the attorney general's office.
Broadwater's bill declares the state's policy is "to aggressively pursue the collection of accounts or claims due and payable to the state of Louisiana through all reasonable means."
Agencies will be required to refer all their delinquent accounts to either the attorney general's office or the new debt recovery office for collection. The debts will have to be referred quickly, once they are 60 days old.
The Office of Debt Recovery will have the authority to revoke and suspend state-issued licenses for back debts and offset tax refunds or other state accounts payable to the company or person that owes the money.
Broadwater worked for a year on ways to get the state's back-owed bills paid and generate millions of dollars owed to state agencies.
He said Louisiana has been too lax in seeking payment for delinquent accounts, which reached $1.4 billion in the most recent tally. He said write-offs deemed uncollectable reached as much as $200 million a year.
"Many of our budget problems could be solved by making simple changes to the way we collect the money owed to us," Treasurer John Kennedy said in a statement praising Broadwater's bill as a significant improvement to the way the state handles its debts.
Currently, the state has 174 agencies - and until Broadwater's bill, no unified collection system to handle all state government debts. The attorney general's office collects back-owed debt for 43 agencies that have contracts with them directly. But such contracts weren't required.
Broadwater said his legislation was modeled on successful debt collection efforts in other states.
A contractor hired by the Jindal administration to devise a strategy for improving debt collection efforts estimated the state could bring in an extra $150 million to $200 million within five years by improving its debt collection process, using methods included in Broadwater's bill.
House Bill 629 can be found at www.legis.la.gov
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