Bill would create state debt collection office

A proposal to step up the state’s debt collection efforts cleared its first legislative hurdle Tuesday.

House Bill 629 would create the Office of Debt Recovery within the state Department of Revenue to pursue payments more than 60 days past due.

The revenue department could grab casino winnings, tax refunds and bank accounts from debtors who owe money to state government. Driver’s and hunting licenses also could be held up.

State Treasurer John Kennedy told legislators that state agencies such as the state Department of Transportation and Development are not designed to act as collection agencies.

“DOTD’s job is not to collect money,” Kennedy said. “They’re pretty good at building roads. But for years, we’ve been telling them, ‘Y’all collect your own accounts.’”

The House Committee on Ways and Means advanced HB629 to the Louisiana House floor.

Millions of dollars are owed to state government. The debts range from delinquent college tuition installments to unpaid environmental monitoring fees.

Some of the money has been owed for just a few weeks. Other bills have not been paid for months or years.

Kennedy said the most recent accounting estimates $690 million in payments to state government is at least 180 days past due.

State officials considered, but rejected, the idea of selling some of the bad debt to the private sector at a loss. Instead, legislators are pursuing the establishment of a state collection unit.

The state Attorney General’s Office collects debt for some state agencies. The new state collection unit would add to those efforts.

According to a financial analysis by the Legislative Fiscal Office, the state would create 23 new positions and spend $1.7 million a year on salaries and benefits to focus on debt collection. For the upcoming fiscal year that starts July 1, the office estimated total administrative costs of $4.4 million for the new unit.

Kennedy said improving debt collection efforts by 10 percent a year could generate $100 million for state government.

The bill’s sponsor, state Rep. Chris Broadwater, said debtors would be charged a collection fee on top of their debt.

State Rep. Regina Barrow, D-Baton Rouge, expressed concerns about harassing people who might not be able to come up with a tremendous amount of money.

Broadwater, R-Hammond, said debtors can set up a payment plan.