Amid concerns about which accounting column to put the collections in, a state Senate committee delayed action Monday night on creating a centralized debt collection agency in state government.
State Rep. Chris Broadwater, R-Hammond, told the Senate Committee on Finance that the state’s patchwork approach to collections results in debts accumulating and considerable amounts of money being written off as uncollectable.
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.
Broadwater’s House Bill 629 got amended during the legislative process to direct dollars collected back to the state agencies owed the debts. Broadwater originally wanted legislators to decide how to spend the collected money.
The Legislative Fiscal Office raised concerns about the change. Deborah Vivien, who analyzes bills’ financial impact, said no concessions were made for money being encumbered or owed to the state general fund.
She predicted the amended bill would result in a huge reduction to the state general fund, which is used to pay the daily expenses of state government.
“How do you fix that?” asked state Sen. Jack Donahue, R-Mandeville and the committee’s chairman.
Broadwater said he is working on an amendment to put any money collected into the state general fund. He told the committee that the amendment is not quite ready.
Donahue suggested Broadwater return with his bill when the committee meets Wednesday. Broadwater agreed.
The decision came after lengthy debate on the proposal.
“We have had a recurring problem in how we collect that money,” Broadwater said.
The Office of Debt Recovery would be created within the state Department of Revenue to pursue payments more than 60 days past due.
The Revenue Department could grab tax refunds and bank accounts from debtors who owe money to state government. Originally, the bill also called for the Revenue department to pursue casino winnings.
Broadwater asked legislators Monday to strip the casino winnings language from the bill.
He said the tools to intercept the winnings include software that can take months to implement. He said he wants to give it a year to make sure the software syncs at the Revenue Department.
After adopting the amendment, the committee delved into the meat of the bill.
State Sen. Bodi White, R-Central, questioned why the state would create a debt collection agency while also offering a tax amnesty program.
The Louisiana House rewrote Gov. Bobby Jindal’s $25 billion state spending plan for the fiscal year that starts in July to include a program designed to encourage 300,000 taxpayers with outstanding state tax debts to settle with the state.
Taxpayers would be given two years to do so. In the first year, all penalties and interest would be forgiven if tax bills are paid in full. In the second year, a 50 percent discount would be offered on penalties and interest.
White said he would ignore the collection agency and pay through the amnesty program if he owed tax money to the state.
“If you come to me, I’m waiting on tax amnesty,” he said.
Tim Barfield, executive counsel at the state Department of Revenue, said amnesty is a short-term program.
He said the debt collection agency would focus on generating money for the state all day, every day, relieving state departments of that task.
“These two can coexist together,” Barfield said.
Broadwater said the agency could create a greater incentive for people to pay through the amnesty program.
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