South Dakota officials are hoping the state legislature grants authority for the creation of a state office for debt collection, a proposal supporters believe would help bring in additional recoveries of between $15.9 million to $34.8 million in the next five years.

The office also could provide more restitution for crime victims and families, possible between $7.9 million and $16.9 million in the next five years, according to a proposal from South Dakota’s Revenue Secretary Andy Gerlach. 

The plan has met with surprisingly strong opposition, according to government officials. 

A state senate committee tabled one version of the plan Thursday at the request of Jason Dilges, Gov. Dennis Daugaard’s commissioner of finance and management.

A completely rewritten version will be presented instead to a House of Representatives committee, Dilges said.

"We’ve reworked the entire concept," Dilges told the Senate panel’s members, while acknowledging Daugaard’s administration is still trying "to get some traction" in the House.

The decision to back away from the Senate version of the legislation, and focus on finding a compromise in a House committee, suggests political conditions might be more favorable for the Daugaard administration on this topic in the House.

Dilges said after the Senate committee meeting Thursday that he has narrowed the list of opponents through amendments intended to relieve their concerns.The main opponent, at least according to media reports in the state, are the professional debt companies - represented by the South Dakota Collectors Association.

The state’s government currently contracts with The Affiliated Group for debt collection services. The contract expires Feb. 28.

The original proposal for an internal debt collection office called for it to be part of the state's Revenue Department. The new proposal would use a different name – obligation recovery center – and attach it to the Bureau of Finance and Management.

A 20% surcharge would be added to debts referred to the recovery center. The center in turn could refer uncollected debts to private debt collection firms, which could add a 20% surcharge.

The current contract with The Affiliated Group allows the company to keep 15% or 22.5% of the amount collected, depending on circumstances, and 35% if the issue goes to court.

State records show payments so far this fiscal year to The Affiliated Group total $12,963.81 since July 1, 2014. The company received $23,486.83 last fiscal year and $44,541.85 in the fiscal year before that.

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