The City of Los Angeles’ collections practices have long been a focus of the Valley Industry and Commerce Association (VICA). The city’s most recent attempt to address the problem has been through the Commission on Revenue Efficiency’s (CORE) Blueprint for Reform of City Collections, which was released earlier this month. While these recommendations are sound (most of them echo ideas VICA initially proposed several years ago), the real question comes down to: will the city have the resolve to act and implement this plan? The report notes that more than one-third of the 35 recommendations made in a 2007 collections audit by then-Controller Laura Chick have yet to be implemented. VICA began closely monitoring the city’s collection practices following Chick’s 2007 audit. This audit revealed that the city was only collecting 52 percent of funds owed, and at this time VICA began working with Chick and current Controller Wendy Greuel (in her capacity as a city councilmember) to improve the disappointing collection rate. Little improvement A 2010 audit by Greuel found that in three years the city had only improved its collection activities by a mere 1 percent. During the time between the two audits, VICA proposed its report known as the VICA 50. The comprehensive document included ideas for revenue generation and budget cuts to help close the city’s budget deficit. Specifically relating to collections, VICA recommended centralizing the city’s billing and collections activities and naming a collections sheriff that would hold departments accountable. Two years ago (October 2008), the collections sheriff motion passed the Budget and Finance Committee and the item has yet to go before the full City Council. It is hard to image that the CORE’s blueprint will not face the same fate as the many collections improvement proposals that preceded it. The city displays no sense of urgency when it comes to its collections practices. Despite numerous recommendations, the city still lacks a centralized billing process and chooses to take no action on old debt instead of selling it to a collection agency. Nearly 20 years The recommendation to centralize billing goes back even before the VICA 50 to a 1991 Ernst & Young proposal of a citywide collections unit, according to the CORE report. Nearly two decades later we have a dismal collection rate that barely reaches above half (53 percent, according to Greuel’s most recent audit) and yet another set of recommendations. The city has received more than enough suggestions over the years to improve its billing and collection practices. Now it is time for action. City officials need to take responsibility for this problem and see that CORE’s blueprint is implemented. Uncollected debt is often called low-hanging fruit because the funds are so well within reach. As the city faces a multi-million dollar budget deficit, it must start making the effort to collect what it is owed. This money could mean the difference in cutting vital city services or increasing taxes on the business community. VICA will remain vigilant about city collections, holding officials accountable to improve the process and raise its collection rate. Business leaders know that in this difficult economic environment it is irresponsible to leave any money on the table. The city is overflowing with recommendations, now it is time to refill its coffers with cash. How do you think the city can improve its collections practices? Do you think taxpayers will ever see the city improve its billing and collection activities? Email your responses or thoughts about the column to [email protected].
Stop Collecting Recommendations, Start Collecting Cash
