All governments should work to accomplish several important goals: Create opportunity and prosperity for people. Operate efficiently. Make sure citizens are treated equitably.
Milwaukee County is planning to join the State Debt Collection program run by the Wisconsin Department of Revenue to advance all of these goals. Some background about the SDC program will help describe why this decision makes sense.
In 2009, during the administration of Gov. Jim Doyle, the Legislature approved the governor’s recommendation that the state should create the SDC initiative. It was modeled after an ongoing Minnesota program that sought to adopt best practices in debt collection.
Today, there are more than 100 government entities all across Wisconsin participating in the SDC program, including local government agencies, University of Wisconsin campuses and state agencies. The program has a proven track record. Collections have increased from $300,000 in its first full year to more than $14 million in the most recent year.
Milwaukee County has not yet joined the SDC program. When the county was looking for ways to fund a share of the new Milwaukee arena, SDC was a logical choice as a way to generate a reliable source of funding without raising taxes or diverting funds from local services.
The SDC program follows best practices for collecting debt, and has more comprehensive collection tools including wage garnishments, levies on bank accounts, and interceptions of tax refunds and payments from other government agencies. When appropriate, the Department of Revenue works to set up payment schedules with people who owe debts based on their ability to pay to help them become compliant on an affordable timetable.
Milwaukee County has committed $4 million per year from SDC collections to help pay for the arena project. This is a very achievable target. It’s money the county can generate simply by improving operations.
SDC charges a 15 percent collection fee to the debtor, which means that the county will receive full payment when debts are collected, rather than payment minus a percentage collection fee. The Wisconsin Department of Revenue fee is lower than the 20 percent fee charged by the Minnesota program, which served as a model for us.
Finally, the SDC program is equitable. Citizens who voluntarily pay their taxes and debts want to know that everybody is being asked to meet their obligations. If some people don’t pay what they owe, the burden falls on others, or services are reduced.
The Department of Revenue is glad to work as a partner to help government operate more efficiently and generate resources for the critically important new Milwaukee arena. Equitable and efficient debt collection can help fund this once-in-a-generation economic development opportunity, and it makes sense to do it.
Richard Chandler is the secretary of the Wisconsin Department of Revenue.