Wisconsin lawmakers are reviewing a plan to send Milwaukee County’s debt to the state’s Department of Revenue for collection.
Assembly Bill 885 would require Milwaukee County to hand certified delinquent debt over to State Debt Collection (SDC) area of the revenue department. The county would on a continuing basis certify all debt that's more than 90 days old and more than $50 to be collected by the revenue department, so the state could proceed with collection. The state’s fiscal estimates put the cost of the collection program at $649,000 annually, with seven full-time employees collecting debt.
Last year Milwaukee County Executive Chris Abele favored a plan for the state to collect unpaid Milwaukee County debts to gather funds to pay for the county’s share of the cost of a new arena in downtown Milwaukee for the Milwaukee Bucks. That provision was removed from the arena funding package that was ultimately approved last year. Instead the legislation simply called for the state to reduce its shared revenue to Milwaukee County by $4 million a year for 20 years to cover the county’s portion of the arena funding. The new plan isn’t tied directly to arena funding.
Milwaukee County has approximately $120 million in delinquent debt. The county has historically collected this debt, but in some cases it takes as long as 10 years.
Of the debt collected by the state for the county, half of the funds (up to $1 million) would be provided to the Milwaukee Area Workforce Investment Board, according to Mark Austinson, policy advisor for Rep. Dan Knodl (R-Germantown). The remainder would be distributed to the county department that was owed the funds, or to the county’s general fund. Debt collection revenue provided to the county’s general fund could be used to help cover the county’s arena funding costs, but it would not directly be allocated for that purpose by the state, he said.
The bill only refers to Milwaukee County but it’s expected that any program eventually could be extended to other counties. The SDC thus would be in direct competition with private collection agencies that collect for municipal governments.The state’s Assembly passed the bill last week and members of the Wisconsin Collectors Association (WCA) plan to oppose the bill with the Senate. Several WCA members have testified in front of the Assembly State Affairs and Government Operations Committee. Milwaukee County Supervisor Steve Taylor released a statement opposing the bill because it would add a 15% surcharge to suburban Milwaukee County homeowners’ property tax payments if they are 90 days late, and could include wage garnishments and other collection tactics.