Gray Davis Targets Fortune in Fees, Fines : Government: He says cities, counties could recoup millions in outstanding debts if the Franchise Tax Board serves as collector.

Promising millions of dollars for cities and counties, state Controller Gray Davis on Tuesday proposed giving the state Franchise Tax Board power to collect delinquent court fines, parking fines, building fees and other debts owed to local governments.

Orange County alone has about $78 million in uncollected fees, according to Davis, although county officials believe the figure is actually about $46 million.

Davis outlined a consolidated debt-collection system under the board, which has the authority to collect back taxes by garnishing wages, freezing bank accounts and seizing property without going to court.

The board “can treat the debts as though they are delinquent taxes,” Davis said at a news conference here. “People know tax officials are serious and don’t want to mess around with them.”

The board now can withhold lottery winnings and income tax refunds, but that authority would be expanded under the proposed “Centralized Debt Collection” program. Local and county governments would have the option of signing up for the service, but it would be mandatory for state agencies.

The proposal was praised by Anaheim Mayor Tom Daly, whose city lost $2.2 million in unpaid fees and billings in 1992 and $1.7 million in 1991, more than any other city in Orange County.

“If we could recapture 10% to 15% of that $2 million with the state’s assistance, that is money that could go towards library services, hiring more police officers and spending more on other local government services that are jeopardized right now,” Daly said.

Daly said that Anaheim, which operates its own electrical system, has had difficulty in collecting delinquent utility bills. It has also failed to collect from some promoters who have used Anaheim Stadium and the Anaheim Convention Center.

“I’m very impressed by the potential to collect a lot of that money,” Daly said.

Santa Ana Treasurer Roderick R. Coloma, whose city lost $1.2 million in unpaid debts in 1992, also touted the plan.

“We’re very excited about it,” Coloma said. “It’s very difficult for us to get all of the money that we are owed, which is a significant amount. We would rather collect the revenues due us before we look at raising any fees.”

Newport Beach Revenue Manager Glen Everroad said his city would welcome the greater ability to collect the $331,000 in unpaid fees and bills it is owed.

“It’s a wonderful opportunity to access sizable resources,” he said in a separate interview.

Everroad, Coloma and Daly attended the news conference.

No county representative was present at the conference but one official later disputed Davis’ debt figure of $78 million.

“I think it is way overstated,” said Charles Hulse, the county’s chief deputy auditor/controller, who estimated the county’s uncollected bills at $46 million.

Hulse said county officials knew little about the specifics of Davis’ proposal but said they would research the matter.

“We could always use a little more muscle,” Hulse said. “But it’s a policy question as to how aggressive you want to be. If after seeing the proposal outlined and if we think it’s good, we would go the Board of Supervisors with it.”

Davis said eight other states are using the debt-collection system he is proposing and have averaged a 25% increase in money collected.

He estimated that California, which has an estimated $6 billion in debts owed, could collect a total of $300 million to $1 billion in the first year, 80% of which would belong to county governments and cities.

“There’s no reason not to do this,” Davis said. “We’re simply doing what any business would have done. A business cannot survive without collecting debt, nor can the government.”

Under the state’s existing collection system, each agency in government is responsible for its own debt collection, a system Davis criticized as “grossly inefficient” and “archaic.”

The system would cost about $7.5 million a year to operate, and Davis has proposed to make it self-financing by imposing fees on debtors.

“These are difficult times, forcing government to be much more efficient than it has been in the past,” Davis said. “We owe it to taxpayers not to leave this much money on the table.”

Davis said the proposal, carried in a bill by state Sen. David A. Roberti (D-Van Nuys), will be brought before the Legislature later this month.