Last updated on 2015.01.26
Boy, if the Mugwumps are concerned about letting the Department of Health give them orders, wait until they see the Department of Revenue's plan to grab their paychecks and bank accounts.
Senate Bill 59 is the Department of Revenue's proposal to create a state debt collection office. Louisiana created such an office last year, and it may generate $10 million in new revenue for that state.
Well, "new" revenue probably isn't the right term. A state debt collection office recoups revenue the state should be getting but doesn't, because someone tries to skip out on a payment to a state agency, constitutional office, the Board of Regents, or the courts.
To get that money, Senate Bill 59 would empower the Department of Revenue to garnish wages. Suppose you take a Critical Needs Teaching Scholarship, get the state to pay for your last two years of college, but then get financially rational and go to work as a network technician instead of as a teacher in South Dakota. You need to pay the state back for all that free tuition, but you think, "Ah, they'll never notice."
They'll notice, and SB 59 will allow them (the Board of Regents, the Governor, whoever's watching the books) to refer your debt to the state debt collection office. SB 59 will empower that office to...
- contact your employer and require that your employer withhold your debt from your paycheck and send it straight to Pierre (Section 25);
- authorize your employer to hit you with a $25 fee for processing the "administrative wage assessment" (Section 28);
- contact your bank and take money out of your accounts (Sections 42–58);
- authorize your bank to charge you $25 for processing the "administrative bank levy" (Section 53);
- block issuance or renewal of your driver's license, teaching certificate, bar certification, hunting license, fishing license, or pretty much any other license the state might issue until you've paid your debt to the state or at least set up a payment plan (Section 62);
- charge you a cost receovery fee equal to 20% of the amount you owe the state, which fee will help fund operations of the state debt collection office (Section 6).
Add all that up, try to stiff the state for $16,000 in tuition, and you could end up paying $19,250.
I have a call in to the Department of Revenue; once I've visited with state officials, I plan to write a follow-up to explain just how much state debt is out there and how much a state debt collection agency could collect.
A state debt collection agency could be useful. When the Banking Commission realize Joop Bollen owes the state $2.4 million in bank franchise tax, they could just send some letters, hit a few buttons, and take that money right out of Bollen's bank accounts. If the state felt generous, it could expand SB 59 to include county agencies and use the bank and wage garnishments to collect all those delinquent property taxes right away.
And think about this: Senate Bill 59 would empower the Department of Revenue to reach out to any employer in the state and withhold money from any paycheck. SB 59's withholdings could serve as a test run for the mechanism we'd need to collect a state income tax. Nothing in the bill says that... but oh, we creative minds can think of some useful implications down the road.
Senate Bill 59 goes to Senate Commerce and Energy for its first hearing soon. Let's see if any conservatives come to the hearing feeling queasy about empowering the state to grab deadbeats' paycheks and bank accounts.
Update 2015.01.26 05:25 CST: Bob Mercer gets some more details on the proposed state debt collection office:
- The state currently contracts with The Affiliated Group of Minnesota to collect debts. That company gets 15% to 22.5% for its services.
- The Department of Revenue has paid CGI of Farifax, Virginia, $49,000 so far to analyze South Dakota's unpaid-debt situation. SB 59 comes from CGI's recommendations.