South Dakota's Senate Commerce and Energy Committee was scheduled to hold a hearing Tuesday on a state Revenue Department proposal to open a state debt collection office.

The office reportedly would pursue money owed to the state's government. South Dakota's Board of Finance regularly approves chargeoffs in the thousands of dollars for state agencies and state universities.

The state Bureau of Administration contracts with a Minnesota-based company, The Affiliated Group, for collection services but the current one-year contract expires at the end of February. The Affiliated Group receives 15% or 22.5% of the amount collected, unless litigation is involved. Senate Bill 59 would move those collection services within state government to be operated by state employees.

A state collection office likely would serve the agencies and departments under the governor’s direct control, but the legislation allows for the Unified Judicial System, the state Board of Regents (state universities) and other constitutional officers to also use the collection office. If approved, one method expected to be used is administrative wage assignment, where state government contacts an employer of a person who owes a debt to state government and a portion of the employee’s wages are diverted by the employer to state government toward debt payment. Another method that could be used involves administrative bank levies where state government uses information from banks about deposits and accounts to seize money from debtors.

The proposed law also would allow the state government to choose not to renew or issue hunting or fishing licenses; motor vehicle registrations; any professional licenses, certifications and permits. The collection office also would still be able to refer any debts to a private collection agency.

The proposal pending in the Legislature is built on an analysis from CGI of Fairfax, Va., which was paid $49,000 to review the state government's delinquencies and make recommendations.  

The legislation calls for a 20% surcharge on debts.  

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