November 27, 2012 by Rick B
$ 40,000,000,000.00—yep you read that right, 40 billion dollars.
What does this number represent? Is it…
1) The net worth of Google CEO Larry Page
2) The cumulative salary of every NFL player
3) The total amount of delinquent receivables owed to municipalities across the U.S.
Larry Page certainly isn’t hurting with an estimated net worth of $20.3 billion, but he’d have to bet his whole fortune on a single hand of Black Jack to hit $40 Billion anytime soon.
It’s no secret NFL players are paid handsomely for their efforts, but what do you get when you add up the salary of every player in the league? The number is closer to $4 Billion than it is to $40 Billion.
So there it is. If you guessed number 3, you are the big winner.
Market Research firm, Kaulkin Ginsberg, estimates the outstanding debt currently owed to municipalities tops 40 billion dollars.
While this number is alarmingly high, it is not all that surprising. Federal funding has been continually cut to municipalities and like the private sector; municipalities are having a hard time getting consumers to pay their bills. Couple this with the reduction of revenue created by decreased housing values, and many municipalities find themselves between a rock and a hard place.
ACA International, a leader in all things debt related, reports that 43 states, the majority of federal agencies, and thousands of cities and counties utilize private collection agencies. We have heard from countless sources that local governments are more understaffed that ever before. Limited resources and an already over-worked staff, make it hard to collect the precious dollars already owed to your city.
Budgetary shortfalls and reductions in Federal Funding make the recovery of delinquent debt more important than ever before for municipalities across the nation. Partnering with a private collection agency could make a significant impact on your city. A reputable firm has the ability to balance the fine line between collecting the debt owed to you, and maintaining a positive relationship with your constituents.
Many states provide programs to local governments that allow for the interception of state tax refunds to pay off uncollected debts. Wisconsin instituted a program many years ago and it has had great success—this year alone, the Tax Refund Interception Program (TRIP) has already recovered over $80 million. Illinois adopted a similar program in 2012, called the Local Debt Recovery Program (LDRP). The LDRP initiative is headed up by the State Comptroller’s office, and has experienced early success.
An experienced collection agency can do more than collect the debt owed to your municipality; they can also help you navigate and administer your state sponsored program. A proven collection agency has the infrastructure and knowledge to support your municipality in the sensitive art of debt collection.
Tax season is right around the corner, act quickly to increase your collected revenue in 2013!