The Jindal administration unveiled a program Friday aimed at collecting $11 million a year from businesses and people who owe money to state government.
The state Department of Revenue said it will intercept money due to taxpayers, vendors and contractors by the federal government when dollars are owed to state agencies.
The department gave the new initiative the name “Federal-State Offset Program.”
“This is a program to help other agencies,” Jason Decuir, assistant secretary for legal affairs for the state Department of Revenue, told state officials Friday.
Decuir described the initiative to the Cash Management Review Board, which is studying ways to collect the millions of dollars owed to state government.
The money owed ranges from delinquent college tuition installments to unpaid monitoring fees. Some of the money has been owed for just a few weeks. Other bills have not been paid for months or years.
The debts are under scrutiny as the state struggles to pay its own bills, particularly for providing health care to the poor.
Jindal administration budget adviser Ray Stockstill told state officials Friday that state government wrote off roughly $1.7 billion in debt because it was three to 10 years old.
He said those debts possibly will be sold to a private company at a discount to generate some of what is owed.
Depending on the discount, state Treasurer John Kennedy said the state could generate $340 million by selling the $1.7 billion for cents on the dollar.
The problem, Stockstill said, is some of the debt may be entangled in bankruptcies and deaths, making it uncollectable. He said the debt needs to be studied in more detail to determine what is collectable.
“We’re trying to take the data-driven approach to maximize returns,” Stockstill said.
State Department of Revenue Undersecretary Clarence Lymon said his agency has $543 million in debt that is three to 10 years old.
He said the debt stems from taxpayers who filed returns but failed to pay their full taxes as well as from taxpayers who did not file returns or failed to report all of their income.
Decuir said the new program, in which other agencies will be allowed to participate, will enhance the revenue department’s ongoing efforts to collect money.
He said the agency already has the ability to garnish state and federal income tax refunds.
Decuir said the revenue department will hire a private company to intercept money due to taxpayers, vendors and contractors by the federal government.
“This is one consulting contract I won’t complain about. I think this is great,” said Kennedy, who has criticized the volume of consulting contracts in state government.
Decuir said Maryland, New Jersey, New York and Kentucky already do what Louisiana is considering.
He said the department must decide which agencies will forward debt to the new collection program, analyze the debt and hire a private company. He said it likely will be months before collections begin.
State Rep. Chris Broadwater praised the proposal.
Broadwater, R-Hammond, successfully sponsored legislation earlier this year to establish a pilot program to sell, securitize or auction portions of the state’s long-term delinquent accounts, or receivables.
“This is exactly what we’re pressing for,” Broadwater said after listening to the revenue department’s proposal.