The state Legislature is again considering a plan to send Milwaukee County debt to the state Department of Revenue for collection.
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. However, 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.
Now a new plan has surfaced to have the state collection Milwaukee County’s unpaid debts, but it is not tied directly to arena funding. Milwaukee County has about $120 million in delinquent debt. The county has historically collected this debt, but in some cases it takes as long as 10 years to collect them.
Assembly Bill 885, scheduled for a vote today, would require Milwaukee County to hand certified delinquent debt over to the state Department of Revenue for collection. The county would on a continuing basis certify all debt that is more than 90 days old and more than $50 to be collected by the DOR, so the state could proceed with collection. The state’s fiscal estimate puts the cost of the collection program at $649,000 annually, with seven full-time employees collecting debt.
The bill, which specifies it can take effect without county board approval, also authorizes Abele to create a division of revenue at the county level to collect accounts receivable and administer debts collected by the state. The department would set up payment plans for debtors who meet certain low income limitations.
The bill was introduced Feb. 8 by Reps. Dan Knodl (R-Germantown) and Josh Zepnick (D-Milwaukee), and co-sponsored by Sen. Alberta Darling (R-River Hills). It is similar to the proposal originally included in the $250 million public financing package for the arena championed by Abele.
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 Knodl. 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.
Knodl’s district includes part of Milwaukee County.
“Prior county audits have shown the debt collection could be improved if it’s centralized,” Austinson said. “Right now, it’s all (done) in different silos.”
Abele said in a statement that the bill would benefit Milwaukee County residents.
“This law will provide significantly better protections and support for folks who can’t afford to pay than we have now and we think they deserve that,” Abele said. “Now, private debt collectors go after people who can’t pay their debts and those collectors can employ aggressive and predatory tactics, regardless of a person’s ability to pay. This law will also provide $1 million a year, every year, for workforce development in 53206 and the neighborhoods that need help the most. We think they deserve that. And it will make it easier for the county to collect from the people and corporations who can afford to pay their taxes but don’t. We think the people who do pay their taxes deserve that.”
Zepnick and Darling could not be reached for comment.
A report from Milwaukee County comptroller Scott Manske in June concluded that while the county would be able to make a $4 million annual payment for arena funding out of existing cash flows from receivables, it is unlikely the county would be able to generate an additional $80 million over 20 years for payments on the arena debt based on the changes to the collection of its receivables.
Milwaukee County Board Chairman Theodore Lipscomb, Sr. released a statement opposing the new debt collection bill, calling it “a rehash of the debt-collection scheme that was cooked up last year by the county executive behind closed doors in Madison as a way to help publicly finance a new private arena for a few billionaire owners.”
Milwaukee County Supervisor Steve Taylor of Franklin released a statement opposing the bill because it would add a 15 percent surcharge to suburban Milwaukee County homeowners’ property tax payments if they are 90 days late, and could include wage garnishments and other collection tactics.
The city of Milwaukee collects debt for its delinquent property taxpayers. Milwaukee Mayor Tom Barrett declined an invitation to have the state collect city debts to help fund the arena (the city is providing $47 million in tax incremental financing for the arena). Milwaukee County collects debt from delinquent suburban property taxpayers.
“Here we go again,” Taylor said. “Garnishing suburban residents’ wages to pay for the Bucks arena was a bad idea the first time the county executive proposed it. Nothing has changed. This is just one more example of the county executive’s pathetic negotiation skills. Except this time, the county executive was hoodwinked into condemning suburban homeowners in order to spare city taxpayers. Last I checked, Abele was obligated to serve all county residents, not just a select few.”
State Reps. Jonathan Brostoff (D-Milwaukee), David Bowen (D-Milwaukee), Fred Kessler (D-Milwaukee) and Christine Sinicki (D-Milwaukee) also released a group statement opposing AB 885, which they said would burden Milwaukee taxpayers and cost more than the collection system currently in place.
“In yet another attack on Milwaukee County, lawmakers have rushed through a bill that concentrates even more power in the hands of the county executive. AB 885 was introduced just last week, sent to a hearing and executive session yesterday, and is scheduled to be on the Assembly floor (today),” Kessler said. “This does not provide enough time for the community to offer feedback or to work on amendments to the bill. It is an outrage.”
“The Milwaukee County comptroller, treasurer, and clerk of courts – the three elected county officials best equipped to handle delinquent debts – are all opposed to this legislation,” Brostoff said. “It puts an unfair burden on people struggling with debt, and traps our county in a potentially inefficient and expensive debt-collection program.”
