In my own small business, when we need money, before we consider cutting programs, laying off staff, or increasing prices, we look at what is owed to us and how we can better collect it. The State of Oregon should do the same.
I have been talking about unpaid taxes and delinquent debt since I first went to Salem and began to understand the problem. I’m really pleased the question is starting to get more attention. For too long there has been an attitude that we’re doing all we can and can’t do better. But I think we can!
I see this as a matter of good management and basic fairness. Instead of increasing our taxes or creating new fees, the state should collect money already lawfully owed. Those who fail to pay should not be subsidized by those of us who do.
Each year, people report $600 million in taxes owed but fail to send a check or present a payment plan. Outright tax fraud is believed to total about another billion dollars annually. Overall, the total amount of unpaid fees, fines, taxes and restitution now total over $3 billion! And each year that amount goes up as new debt is piled on top of old.
This week Oregon Secretary of State Jeanne Atkins released an audit report on efforts to collect these debts. The report concluded, “The state needs a sustained focus to improve collections performance.”
To put this in context improving the collection of annual unpaid taxes by only fifty percent would produce nearly $300 million per year in additional revenue — without raising current taxes, fees and charges. That’s enough to pay for pay for more than 2,000 fully funded teaching positions.
Collection of past due receivables has dropped since 2008. At 2014 debt levels, every increased percentage point in the statewide collection rate would net about $38 million. If Oregon had collected delinquent debt at a 13.5% rate in 2014 – last achieved in 2008 – the state would have brought in nearly $90 million more. Clearly there is real money at stake and a real opportunity for improvement.
The Secretary of State is looking agency-by-agency at how much is owed, what is really collectible, and how we can more effectively catalog or collect it.
Unpaid accounts are owed to more than fifty state agencies. However, about ninety-nine percent of all the outstanding debt is owed to only nine state agencies and the Judicial Branch. More than eighty-eight percent of the debt is owed to just three state entities, the Judicial Branch, the Department of Justice and the Department of Revenue.
Most of the money owed is the result of unpaid taxes, fines, fees, or charges. By far the largest amount is for restitution ordered to crime victims. And many of these debts may be difficult to collect. The debtor may be unemployed and have limited capacity to pay. The debtor may be incarcerated. The debtor may have experienced bankruptcy. A good deal of the total debt has been owed to the State for a long time and is unlikely to ever be collected. So we need to track what I call “real” debt rather than just numbers.
At the same time, we know there are 9,000 businesses that currently get contracts from one agency at the same time they owe money to another agency. That’s unacceptable!
So what can be done?
Oregon can implement some productive collection tools used by other states, resolve tricky legal issues that keep agencies from talking to each other, and precisely measure how well different collection companies perform for us.
Some agencies have made improvements. However, the audit identified four tools the state has considered for years, but not implemented: vendor offset, expanded levies on debtor bank accounts, a state lien registry, and internet posting of debtors.
I was a principle advocate of Senate Bill 55 in the last session. The SOS audit references this new law as an important tool to start cross-matching information and improving collections. I helped add counselors to the Department of Revenue to help people create payment plans. And I inserted a requirement in the ODOT budget that they have to stop hiring firms with outstanding debt to the state.
In the coming February session, we’re discussing ways to improve liens and other tools to recover restitution owed to crime victims. There is lots to be done. But we are making progress.
You pay your taxes and I pay mine. But when some people do not, that means we either need to cut important programs or ask other Oregonians to pay more. I’ll continue working to ensure that all Oregonians pay their fair share.
Rep. David Gomberg
email: Rep.DavidGomberg@state.or.us I phone: 503-986-1410
address: 900 Court St NE, H-371, Salem, OR, 97301