La. considering ways to boost debt collection
Last Modified: Thursday, July 12, 2012 7:11 PM
BATON ROUGE (AP) — As state officials look to beef up the collection of hundreds of millions of dollars in debts owed to agencies across Louisiana government, one proposal would auction off some of the past-due accounts.
Louisiana has no centralized collection agency to handle all state government debts. The attorney general's office collects back-owed debt for the state Department of Revenue and a few other agencies that have contracts with them directly. But such contracts aren't required.
Lawmakers in the recently-ended regular session authorized the creation of a two-year pilot program that would let the state sell or auction off a certain slice of long-term delinquent accounts for upfront cash to companies that believe they can collect some of the money owed.
Commissioner of Administration Paul Rainwater, the governor's chief budget adviser, told a cash management panel Thursday that his office was considering the pilot program idea. Rainwater said his staff was reviewing similar programs in other states and will have recommendations within two months about whether and how to roll it out in Louisiana.
Rep. Chris Broadwater, R-Hammond, sponsor of the legislation, said in the fourth quarter of 2011 state agencies had more than $753 million in accounts receivable more than 180 days old, with $20 million to be written off as uncollected.
Broadwater said he believes some of the money could be collected if Louisiana devised new ways to deal with back-owed debts.
"It's hard for me to imagine there's not a way to get a better return," he told the Cash Management Review Board.
The Hammond lawmaker said he'd consider the legislation successful even if it just generates new ideas for better ways to collect on past due accounts.
Treasurer John Kennedy said he will hold hearings to review what other states do with their accounts receivable.
"We've got a problem here. It's a longstanding problem that goes back many, many, many years, like 20 or 30 if not longer," Kennedy said.
Rick McGimsey, with the attorney general's office, said he has always believed a centralized debt collection agency would be an asset in Louisiana. He said the attorney general has contracts with 21 state agencies to handle their past due accounts.
"We file lawsuits. We garnish wages. We seize assets," McGimsey said.
But he added the state doesn't have any requirements that accounts receivable be sent in a particular order or timeframe, and he said the attorney general's office can only collect debts referred to the office.
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