HB652: relative to the collection of debts owed to the state.

HB 652-FN – AS INTRODUCED

2007 SESSION

07-0063

05/04

HOUSE BILL 652-FN

AN ACT relative to the collection of debts owed to the state.

SPONSORS: Rep. Hawkins, Hills 18; Rep. Mooney, Hills 19; Rep. Hinkle, Hills 19; Rep. Bergin, Hills 6; Rep. L'Heureux, Hills 19; Sen. Roberge, Dist 9; Sen. Kenney, Dist 3

COMMITTEE: Executive Departments and Administration

ANALYSIS

This bill authorizes the department of administrative services to oversee, on behalf of state agencies, debt collection conducted by collection agencies and law firms. Recovered funds, less collection costs, shall be returned to the appropriate agency. The bill also requires the department of administrative services to submit an annual report on the collection activity to the legislature.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

07-0063

05/04

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Seven

AN ACT relative to the collection of debts owed to the state.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 New Subdivision; The State and its Government; Treasurer and Accounts; Collection of Debts Due the State. Amend RSA 6 by inserting after section 43 the following new subdivision:

Collection of Debts Due the State

6:44 Collection of Public Debts by Collection Agencies or Law Firms.

I.(a) The department of administrative services shall manage and be responsible for overseeing the debt collection function for all state agencies by private collection agencies or law firms. All net proceeds, after legal fees and expenses of suit and collection, shall be credited to the agency account for which the claim was collected.

(b) The amount of the collection fee and the terms and conditions of retention shall be negotiated by the department of administrative services and the private collection agency or law firm, subject to governor and council approval, and the requirements of this subparagraph. If the debt allows for collection of legal fees and expenses, the amount of the collection fee as negotiated between the department of administrative services and the private collection agency or law firm shall be added to the bill of costs to be paid by the debtor.

II. No debt may be assigned to a collection agency or law firm unless:

(a) There have been at least 2 documented attempts, at least 10 days apart, to notify the debtor of the existence of the debt and of the fact that the debt may be assigned to a collection agency or law firm for collection if it is not paid; and

(b) At least 15 days have elapsed from the last notice attempt.

III. Collection agencies or law firms assigned debts under this section shall have those remedies and powers which would be available to them as assignees of the state. The collection agencies or law firms are likewise bound by applicable laws governing unfair collection practices.

IV. For purposes of this section, a private collection agency or law firm shall cease its efforts designed to collect the debt and inform the department of administrative services and the agency upon the occurrence of any of the following:

(a) Direction from the department of administrative services.

(b) Bankruptcy of the account debtor.

(c) Determination by the private collection agency or law firm, after diligent inquiry, that the debt is non-collectible.

(d) Upon order of a court having jurisdiction over the debtor in a criminal or civil matter.

(e) Direction from the department of justice, after consultation with the department of administrative services.

V. The commissioner of administrative services shall submit an annual report, on or before June 30, to the speaker of the house of representatives, the president of the senate, and the chairperson of the house standing committee on executive departments and administration, relative to collection activity under this section. The report shall include, for each account: the relevant agency; the amount to be collected; the amount collected and whether it was collected by a collection agency, law firm, or court action initiated by the department of administrative services; any expenses incurred; and any amount outstanding.

VI. For purposes of this section, the term “debt” shall include fines and other debts, including the fee required under subparagraph I(b) of this section.

2 Effective Date. This act shall take effect 60 days after its passage.

LBAO

07-0063

12/14/06

HB 652-FN - FISCAL NOTE

AN ACT relative to the collection of debts owed to the state.

FISCAL IMPACT:

The Department of Administrative Services indicates this bill may increase state revenue by an indeterminable amount in FY 2007 and each year thereafter and may increase state general fund expenditures by $39,796 in FY 2008, $40,602 in FY 2009, $42,309 in FY 2010, and $44,072 in FY 2011. There will be no fiscal impact on county and local revenue or expenditures.

METHODOLOGY:

The Department of Administrative Services states its main activity associated with the collection of debts on an ongoing basis is managed by the Office of Cost Containment (OCC). The Department assumes the OCC would be assigned the new function established in this bill of overseeing, on behalf of state agencies, debt collection conducted by collection agencies and law firms. The Department is unable to estimate the total increase in state revenue from debt collected by private collection agencies or law firms because it does not have estimates of the amount of outstanding debt owed to the various state agencies. However, the Department indicates that $923,000 of calendar year 2006 billings by the OCC for court-appointed attorney fees are outstanding due to bad addresses. The Department estimates 5% of this amount, or $46,150, will be collectible due to the difficulty associated with locating these individuals and the limited resources of the debtors.

The Department further states an additional Program Assistant II (LG 15) would be required to administer the function established by this bill; however, this bill does not establish the position or provide an appropriation for the position. Costs associated with the position are calculated as follows:

FY 2008 FY 2009 FY 2010 FY 2011

Salary $26,228 $27,378 $28,529 $29,718

Benefits (48.3%) 12,668 13,224 13,780 14,354

Equipment 900 - - -

Total $39,796 $40,602 $42,309 $44,072