Officials planning to develop system
State officials are trying to determine the best way to collect hundreds of millions of dollars owed to state government.
The Cash Management Review Board met Thursday at the State Capitol to begin tackling House Bill 741, which established a pilot program to sell, securitize or auction portions of the state’s long-term delinquent accounts.
“If we’re doing a poor job collecting that money, you should have the opportunity to see if we can mitigate the damage that’s ultimately done to the state fisc,” state Rep. Chris Broadwater said.
Broadwater, R-Hammond, sponsored HB741, during a session beset by quarrels over how to balance the state budget amid disappointing revenue.
More than $1.3 billion is believed to be owed to the state with $736 million more than 180 days past due.
The state Department of Transportation and Development recently billed Walker $1.3 million for a utility line relocation project that began in 1998. A bill from 2003 went unpaid.
Commissioner of Administration Paul Rainwater, the governor’s chief budget adviser, told the Cash Management Review Board that he will come up with suggestions in two months for a cost-effective approach to collecting debt owedto state government. Whether those suggestions will mirror Broadwater’s approach is unclear.
“We have some ideas,” Rainwater said.
The Division of Administration recently informed legislators of $55 million in debt “write-offs” that were either uncollectable or three years past due. Most of the write-offs belonged to the state Department of Health and Hospitals and the state Department of Revenue.
One problem is that the state lacks a centralized debt-collection unit.
Assistant Attorney General Richard McGimsey said the Louisiana Department of Justice began collecting student loans and then branched into entering into contracts with state agencies to pursue debt by garnishing wages, seizing assets or filing lawsuits.
Other than state Department of Revenue debts, there is no requirement in Louisiana for delinquent payments to be forwarded to the Attorney General’s Office, McGimsey said.
Broadwater’s legislation calls for 25 percent of state debt to be sold to private companies for cash. The companies would recoup their expenses by pursuing the debt.
The approach mimics a suggestion that State Treasurer John Kennedy made while serving on the Commission on Streamlining Government.
“I established it this way, as a pilot program, because I do think it is a very new procedure, a new policy that requires some work on our end,” Broadwater said.
A larger issue, he said, is why the state is writing off hundreds of millions of dollars in debt. He said the problem goes back at least five administrations.
Broadwater said he envisions a trial run in 2013 to see what kind of return the state could get on test cases.
“I will try to be an asset, not a thorn in your side,” he said.
Rainwater said he is looking at what other states do. He said he plans to sit down with Kennedy and others to develop a plan for moving forward.
One question that needs to be answered, Rainwater said, is which debts the state should pursue.
“We’ve got a problem here, and I think it’s a long-standing problem,” Kennedy said.