Some things are just downright difficult to understand;
- Item: On June 20, Gov. Bobby Jindal signed HB 629 (Act 399) into law. The bill, passed during the 2013 legislative session, created the Office of Debt Recovery within the Louisiana Department of Revenue for the collection of delinquent debts owed to certain government entities—taxes that one source said far exceed the official estimates.
- Item: A month later, on July 21, Jindal signed HB 456 (Act 421) into law that created a tax amnesty program whereby those owing taxes to the state may have 100 percent of their penalties and half the interest waived. The letters being sent out this week to delinquent taxpayers, however, could provide them with an argument on a legal technicality that also won’t have to pay the tax principal amounts.
As we said, some things just don’t make sense.
On the one hand, the legislature passes and Jindal signs into law a bill creating an agency whose specific purpose is to collect debt—lots of debts—owed to the state.
The new agency, according to the Legislative Fiscal Office will create 23 new state positions (the antithesis of the Jindal philosophy of government) at a cost of $1.7 million per year in salaries and benefits and another $4.4 million in administrative costs.
But with nearly $1.4 billion in payments owed to state government that are at least six months overdue, that would seem to be a good investment in that one estimate says that if the state increases debt collection efforts on such outstanding debts as delinquent college tuition installments and unpaid environmental monitoring fees by as little as 10 percent, it could generate an additional $100 million per year for the state.
On the other hand, Jindal’s new $250,000-a-year Secretary of Revenue and the Louisiana Legislature, by virtue of Act 421, will let delinquent taxpayers off the hook for all penalties and half the interest owed on those back taxes.
The Legislative Fiscal Office estimates about 300,000 persons and businesses who owe some $700 million in delinquent taxes will be eligible for the amnesty program, though only about 30,000 are expected to take advantage of the amnesty date, which will begin on Sept. 23 and end on Nov. 22.
The state anticipates receiving $200 million from the program for the current fiscal year with the revenues earmarked for health care bills. Any shortfall will result in even more health care cuts.
LouisianaVoice, however, has received information that indicates the amount of delinquent taxes, interest and penalties may be far larger than the $700 million estimate—almost three times that much, in fact.
Figures provided us shows that the total owed exceeds $2 billion. That includes taxes of $1.03 billion, interest of $687,000 and penalties of $301 million.
“It is amazing how many taxes are not paid,” said our source. “Amnesty will give us another few years in ‘garage sale’ money and then when it runs out, say four years from now in the middle of the next administration (the) Jindalites can cry foul and push for more of the same type programs.”
The amnesty letters are being printed this weekend and will be mailed out within the next few days. “The letter tells taxpayers what they owe and explains that they owe half the interest and no penalty,” the LDR employee said. “But it doesn’t mention anything about paying the tax. A good lawyer could mount a good argument on this.
“The word is that the error was discovered this week and the change would have been minimal (by) adding the words ‘tax and’ before the interest comment,” the employee said. “The really interesting thing is this form letter was put together some time ago and at the last minute someone decided to proofread it. Still, it seems as though someone, maybe in the legal department, would have been given this to read.”
Louisiana Voice 
Wait a minute! 23 people earning with benefits $1.7 million equals about $75,000 per person. And what in the name of heaven could cost $4.4 million in Administrative Costs? Sounds to me like the 23 overpaid honchos who are too important to write or proofread the most important letter they could write in their official capacity must be housed in the Taj Mahal and have “outsourced” or “Privatized” the actual collection effort. And Jindal thinks that 23 people can effectively collect past due taxes from 300,000 individuals and businesses? That’s over 13,000 accounts per employee. Oh, now there is a really manageable case load. Once again we see that Jindal has no concept of numbers and plausibility. He is clueless. And sadly he is ours.
That’s $1.7 million in salary AND benefits, which includes health insurance, unemployment insurance, and retirement. Also, bear in mind if you have a half-dozen administrative types (who would probably be former legislators) earning $150,000 each, the working stiffs by necessity would be making far less.
Also, this wasn’t the same office that sent the letter; that was the Revenue Department, not the Office of Debt Recovery (although ODR is part of LDR).
Trying to look at the bright side, if all the numbers reported to you are accurate there is at least the possibility of actually getting the $200 million the fiscal hawks substituted for even more speculative revenue in the governor’s budget proposal. Again, looking on the bright side, the creation of this office would seem to indicate somebody in the Jindal administration recognizes that there are things better left un-privatized (unless, of course, “A Businessman” is correct and the real work will be contracted out, in which case his whole argument about the costs being excessive is valid. Again, trying to be positive here, perhaps creation of an effective, continuing method of collecting back taxes will have the effect of enhancing the amnesty program and preventing some businesses from simply holding off until the next amnesty program.
I’m holding off judgment until I see who staffs the Office of Debt Recovery. If he runs in more retired/tired/defeated legislators at six-figure salaries, then I will assume nothing’s changed.
I like to share your optimistic outlook Stephen but I can’t help but think that the present Department of Revenue, with it’s grossly overpaid and under qualified Secretary, wouldn’t have reaped the additional $200 million in collections from this amnesty program without the creation of this new Office of Debt Recovery. More likely the Office was created now so Jindal could beat his chest and crow about what a wonderful thing he did by creating this new crony cash cow when the projected windfall comes in. Seems like it would be more sensible to try the amnesty program first and then take further action only if it didn’t work. After all we already have an entire Department dedicated to collecting these debts. Sorry, I forgot. ‘Common sense’ is not considered when this administration makes decisions.
The sad truth is that this will probably be privatized and no state workers will be used since the cutbacks and layoffs have occurred in all departments except “head officers” who only work for big bucks and step ups or step on to the hard working state employees. Those many dollars will be lost somewhere in the paper work and who’s going to follow the money collected?? There will be a line forming out the back door of the governor’s mansion. Hope I’m wrong, time will tell.
I knew I should have stuck with my usual philosophy, consistent with a quote attributed to Benjamin Franklin: “I’d rather be a pessimist because then I can only be pleasantly surprised.”
It is a kind of gloomy outlook, though.
Somewhat off-topic: Have you ever noticed how Franklin, Jefferson, Lincoln, and other statesmen from our early days as a country seemed to be smarter than their counterparts today? Is it because life was a lot simpler then, or because we are dumbing ourselves down with apathy, both, or neither?
Maybe Stephen, they were wiser and wanted only the best for their country and perhaps more honest, but those today should use them as role models instead of using their own self serving role they play in life!!! It’s pretty hard to be positive in Louisiana today, or find a role model to admire. Sorry.
This entire scenario around the creation of “office of debt collections” is that of providing Jindal an administrative vehicle to “reward” those businesses and individuals that have financially supported Jindal over the years by reducing or eliminating their tax liability. Let us reference a previous article presented in a LA VOICE, June 19, 2013. The article presents the fact that some 300 individuals and 25 PAC’s owe a combined total of ethics fines amounting to almost $1,000,000 dollars. The key here is the fines were assessed but have never been collected.
The same “Charlie Tuna” approach administered by the ethics board will be mirrored in the “new and improved” office of debt collections. The department will provide Jindal a vehicle to reward individuals and businesses that have supported and never criticized(at least not on the record) his method of governing and punishing those businesses and individuals not in line with or have publicly questioned Jindal’s “draconian” methodology of governing.
This can be further evidenced by the fact that the “office of debt collections” was placed under the auspices of the DOA and not under the State Treasury where from an administrative standpoint the new office should be placed. The collections of revenue is not part of the administrations mission. The DOA has yet to produced the 2012/13 ANNUAL TAX COLLECTIONS REPORT which is typically released within two to three weeks of the new fiscal year. We are now into the third month of the new fiscal year and the report has not been produced. If the DOA can not produce one report, how, pray tell, will the DOA account and report on debt collections? Of course, Jindal wouldn’t dare place this new office of debt collections under John Kennedy’s administration. First, because Jindal would lose control over the departments operations and second, Jindal would be unable to invoke his “brand” of “executive privilege”, something he calls the “deliberative process”, and deny the public,as he has done and continues to do in so many instances, the public records detailing the department’s decision making process, the underlining reasons justifying the decisions rendered, the ultimate outcome of such decisions and just how much revenue such decisions cost the state.