Capital Bureau

SALEM — In an effort to address the “overhead costs” of state government, Gov. Kate Brown announced plans Thursday to direct state agencies to step up their debt collection efforts.

As of June 30, 2016, the state was owed about $3.3 billion for things such as unpaid fees, fines, and taxes, according to a December analysis by the nonpartisan Legislative Fiscal Office.

Brown, a former secretary of state who oversaw audits of the state’s revenue department, says about $600 million to $800 million is owed to the state’s general fund. About 95 percent of that amount, she said Thursday, is related to unpaid taxes.

Through the executive order, Brown plans to direct state agencies to determine if a contractor has debt with the state before issuing or renewing state contracts, and to report outstanding debt and the amount they think is collectible to the state’s chief operating officer by June 1.

The order also asks the Department of Revenue to “evaluate” making a transparency website that lists “legally appropriate information about (the state’s) debtors.” The state’s open data portal, using datasets from the state revenue department, already publishes a list of the top 50 delinquent debtors in both personal income and business taxes.

“I think it’s critically important that we be more aggressive and more comprehensive in our approach to debt collection,” Brown said in response to questions from reporters Thursday.

Asked about the possible expense of her debt collection proposal, Brown said the state gets “big bang for our buck” when hiring additional full-time equivalent employees at the Department of Revenue. Noting the state’s hiring freeze, she said that “what’s key about this is the comprehensive, coordinated and aggressive nature that we’re undertaking to collect those dollars owed to the state.”

The details of Brown’s plan won’t be available until she signs the order next week, so it’s unclear how they will differ from the state’s current collection efforts.

It’s also unclear how much of the outstanding debt can be collected.

The amount of money owed to the state is constantly in flux, and there is a finite amount that is actually collectible, according to Bob Estabrook, a spokesman for the Department of Revenue.

“Unfortunately, not all debt is created equal,” Estabrook said.

For example, income tax debt usually indicates that at one point the debtor was making money, Estabrook said. Court-ordered fines and judgments, on the other hand, can occur regardless of the debtor’s financial circumstance or job status.

While DOR has ways to collect debt, sometimes the agency lacks enough information to find people with outstanding debt, and sometimes the people who owe money don’t have the means to pay.

“We have kind of a standard set of tools we use,” Estabrook said, “...And once you’ve gone through the standard steps, you can get to a place where (debtors) don’t have assets we can pursue, or we don’t have the information to pursue that debtor.”

It is tough to say whether hiring more people at the department, as a bill before the Legislature proposes, would greatly decrease the amount of money owed to the state.

Senate Bill 89 is an effort to centralize collections at the Department of Revenue, a move that could cost the state about $2.4 million in additional personnel costs. The bill would require certain state agencies using private collection agencies for specific debts after 90 days to use the collections services of the Department of Revenue instead.

An analysis from the nonpartisan Legislative Revenue Office says the proposed measure has “indeterminate” effects on the state’s revenue because it depends on an unknown: whether the Department of Revenue is more effective at collecting debt than private collectors.

“Data are not available on the relative efficacy of collections efforts and the population owing debts to various agencies can vary greatly,” the analysis states. If the Department of Revenue is more effective at collecting debt than a private entity, then revenues could increase; but if they’re not, revenues could actually decrease.

State Rep. David Gomberg, D-Central Coast, who has advocated for improving state debt collection, said he believes there are several things the state can get better at.

Among them, he thinks that the state should keep track of state contractors who have outstanding debt, a measure the governor’s executive order plans to call for. The state hasn’t tracked contractors who owe the state money because of “antiquated computer systems that can’t talk to each other,” Gomberg said.

He also has suggested cross-checking lists of people who win lottery awards or receive other money from the state in the form of tax refunds and pensions with lists of people who owe the state money.

Gomberg acknowledged that more robust debt collection wouldn’t address the current $1.6 billion gap between revenues and expenses in the upcoming two-year budget.

“Listen, in the short run we’re looking at a $1.6 billion deficit,” Gomberg said. “Improving our debt collection isn’t going to solve that problem, but if we can generate another $100 million or $200 million a year, that’s money that can be well spent on a lot of important programs right now.”

Recommended for you

(0) comments

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.