New debt collection office expected to generate another $10M for Louisiana treasury this year

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BATON ROUGE, Louisiana — Louisiana's new debt collection office, only about a year old, is on track to boost repayment of delinquent accounts by $10 million this budget year, Revenue Secretary Tim Barfield said Tuesday.

The money already was assumed in the state's budget, so it won't offer any relief to lawmakers looking for ways to solve the state's ongoing financial problems, however.

Barfield told an oversight board that his department's work to piece together the centralized collection agency known as the Office of Debt Recovery was on schedule to be complete by mid-2016.

"We're seeing a lot of benefits already, just from the focus on the debt," he said.

Lawmakers created the office in 2013 to bolster collection efforts in a state where back-owed debts topped $1.1 billion in a recent report. The office, which currently has eight full-time employees, has the authority to revoke licenses, seize bank accounts and take tax refunds.

Although recovery efforts are enhanced with the new office, Barfield has had to manage expectations. He has repeatedly explained that many of the state's oldest debts are uncollectable and that state officials shouldn't expect giant sums to roll in each year.

"The expectation of everybody is this is going to be hundreds of millions of dollars a year. I think the reality is for a relatively small cost, a few million dollars a year, you're going to get to the point where you get 20 to 25 million (dollars) a year," Barfield said, after providing his update to the Cash Management Review Board.

Treasurer John Kennedy and Rep. Chris Broadwater, R-Hammond and sponsor of the legislation creating the office, praised the work done so far.

"Long-term, there's no doubt in my mind that this is a good bang for the buck," Kennedy said. "It's not going to go as quickly as we'd like. There are going to be some problems we didn't anticipate. But once we get the bones, the infrastructure established, I think we'll see the monetary rewards."

Barfield's department is working with agencies — Louisiana has more than 200 of them — to develop individual collection agreements and to assess the delinquent accounts they have.

Eleven agencies have worked out participation agreements so far, Barfield said. He's focused first on the top departments that oversee more than 90 percent of the back-owed debts, including the health, public safety and corrections departments.

The Office of Debt Recovery also has been signing up banks to participate in a system that will let the state seize money from accounts to address back-owed debts.

State agencies are being required to refer all their delinquent accounts to either the attorney general's office or the new debt recovery office for collection. The Office of Debt Recovery will handle debts considered final with no further right of appeal, and agencies will have to refer the accounts quickly, once they are 60 days old. It won't handle debts owed to federal social services programs or back-owed unemployment compensation.

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