Free Ride for Deadbeats

Try to imagine running a big business in the following fashion. You’re concerned with your sales mission, quality control, delivery, customer outreach--all the basics. But somehow, bill collection doesn’t hit the radar screen. You aren’t worried about it. You don’t even have a clue about how many debts have gone unpaid. Got it? Now, imagine how quickly your shareholders would storm your office and toss your backside onto the sidewalk.

Unfortunately, local governments such as Los Angeles County’s do not face such righteous and immediate ire. Departments putter along with a fiscal mentality that can only be described as cavalier. Officials talk about the Big Picture and apparently dismiss debt collection as something that’s beneath their station. Then, come budget time, the department heads wail and offer worst-case scenarios about services they will have to cut if finances are too tight.

Well, to the likely amazement of taxpayers, a first-time study of unpaid Los Angeles County debt shows that officials failed to collect $958 million in outstanding bills last year. And that is a conservative estimate. Here’s another relevant tidbit. The county’s treasurer-tax collector has just eight people making collections, and the department has been under a hiring freeze for 10 years. Go figure.

This is the point where you ponder how those multiple millions, if collected, could have been spent. Personnel shortages? Just $300 million would pay for 2,237 positions. About $380 million would cover a year’s worth of federal subsidies to the county health department. The uncollected debt could also nearly eliminate the county’s unfunded pension liability for retired county workers.

Some of this public debt will have to be written off because it is too old, and the county will have a struggle to convince debtors, after all these lax years, that it is serious about making them pay.

The study produced 58 detailed recommendations based on how other jurisdictions and businesses do a better job. Among them: wider use of outside collection agencies, established collection policies and a dedicated staff for same. The use of modern technology would allow computerized accounting systems that make cold calls for the collector; when someone answers, the call is transferred immediately to the collector working the account.

This is a report that ought to be embraced by the county Board of Supervisors. It’s safe to say that the document figures to pay for itself, many times over, in short fashion.