In a major press conference on cost containment and government efficiency last Thursday, Governor Kate Brown praised coastal State Representative David Gomberg work to ensure that money owed to the State of Oregon is collected effectively and efficiently.
“I want to acknowledge Representative David Gomberg who has worked tirelessly to support our efforts to improve debt collection,” Brown said.
Gomberg has long been a vocal and energetic advocate for better collection of uncollected taxes, fees, overpayments, and fines. “In my own small business, when we need money, before we increase prices or cut staff, we look to our accounts receivable. For the state of Oregon, our receivable accounts total over $3.3 billion,” said Gomberg.
Liquidated and delinquent receivables owed the state have almost doubled since 2008 while collection rates have dropped. This debt is spread over 130 agencies, but 90% is concentrated in just five departments.
Agency Accounts Total Outstanding Debt Average Account Balance
Judicial Dept. 1,653,488 $1,626,050,392 $983
Revenue Dept. 113,204 $629,451,807 $5,560
Justice Dept. 598,620 $397,461,171 $664
OSHU 129,771 $179,899,635 $1,386
Employment Dept. 52,697 $161,827,327 $3,071
Gomberg has recommended several steps to improved collection efforts:
Review Vendors: A recent Secretary of State audit reports over 9,000 businesses that provide products or services to the state also owe monies to state agencies. Cross-referencing contracts with collections will address this unacceptable oversight.
Review Payments: State disbursements for lottery awards, tax refunds, pensions, and other payments should similarly be reviewed against the debtor list.
Credit Reporting: While commercial debt effects credit reports, public debt does not. Unpaid taxes, for example, do not appear in credit ratings. Using tools like liens on personal property will ensure individual credit ratings properly reflect state debt.
Performance Measures: The five largest debt-holding agencies should report biennially in the state budget process on their goals and performance for deducing delinquent debt.
Review Debt Forgiveness Criteria: Each year, over $100 million of accounts receivable are written-off or forgiven as uncollectable. State statute details the criteria used for such write-offs. The total forgiveness each year should be reviewed for accuracy and reported to the legislature annually.
In an executive order also signed during the same press conference, Governor Brown is directing all state agencies to do the following:
By June 1, 2017, report to the state’s Chief Operating Officer with their most recent uncollected debt numbers and what they think is collectable.
• Require all agencies to determine if a contractor has debt with the state before issuing or renewing state contracts.
• Ask the Department of Revenue to evaluate creating a transparency website that lists legally appropriate information about debtors.
Gomberg applauded the Governor’s strong response. “Despite six audits on delinquent debt in the past 20 years, the State has continued to treat the issue with indifference. Our receivables have actually doubled in the past ten years. I’m very pleased the Governor is stepping up with these clear and definitive proposals.”
As of June 30, 2016, there was $3.3 billion in uncollected state debt. Of that amount, about $600-$800 million is owed to the general fund. About 95 percent of the outstanding debt owed to the general fund is related to unpaid taxes.
The budget-writing Joint Ways & Means Subcommittee on General Government has scheduled eight days of review for the Oregon Department of Revenue’s 2017-2019 budget. Gomberg serves on the committee and looks forward to the conversation. “Over 100 positions have been funded by the Legislature but remain vacant. This just doesn’t make sense. These are positions intended to help collect taxes and uncover fraud. But they are also designed to help Oregonians answer questions and create reasonable payment plans. Filling these positions would be a win-win-win for the state budget, tax payers, and our economy.”
“Let’s be clear that collecting money owed is not going to solve our larger structural fiscal problem. The state is struggling to close a $1.6 billion deficit. One or two hundred million more will not change that. But it won’t hurt either. As we begin to talk about tax reform and revenue, Oregonians want to be confident that we are doing what we do, better, and that everyone is paying their fair share.”
Information provided by Representative Gomberg’s Office