Debt recovery program proposed

Lottery winnings and other state-paid funds could be withheld to settle debts under legislation heard by the Judiciary Committee Feb. 13.

LB870, introduced by Lincoln Sen. Kate Bolz, would create the Public Debt Recovery Program, which would use state treasury funds to satisfy an individual’s debt to a public entity. The funds could include income tax refunds, lottery prizes, payroll, contract payments and unclaimed property and would be used to pay only debts owed to state agencies, courts and political subdivisions.

“My office has identified over $8.7 million in debts owed to Nebraska municipalities,” Bolz said. “I think it’s only fair that people pay their debts and I think it’s important that funds go to their intended purposes,” she said.

Bolz said the bill would create a new centralized office within the State Treasurer’s Office and would be modeled after other states’ successful programs.

Gary Krumland of the League of Nebraska Municipalities testified in support of LB870. He said Nebraska communities’ largest area of past due debt is utility bills and it sometimes takes years to collect those debts through property liens.

“With utilities, if somebody doesn’t pay, then everybody else has to pay little more—so having an extra tool to collect this money would be very helpful,” Krumland said.

State Treasurer Don Stenberg testified in opposition to the bill, saying the state already has laws permitting state agencies to use collection agencies to recover debts. He also questioned the cost effectiveness of the bill, saying it would create a “very large hearing agency” whose duties currently are carried out by each municipality.

The committee took no immediate action on LB870.