VICA Flexes Muscles On Uncollected Bills

When members of the Valley Industry & Commerce Association met with Los Angeles officials on how they could bring in money by collecting on unpaid bills they received no disagreement. What didn’t happen was any City Council action to follow up on its suggestion. The association, however, didn’t give up on its idea that the city’s $400 million deficit could be reduced by going after these outstanding bills, some of which date back years, according to a report from the City Controller’s Office. The association and Mel Kohn, chairman of the Audit Sub-Committee, kept up the pressure. When appearances before the City Council and its Audit and Government Efficiency Committee failed to stir the council to action, Kohn returned to the committee and met separately with those elected leaders that would give them time. Those efforts paid off on Aug. 8 when Councilmember Wendy Greuel made a motion to create what VICA has dubbed a “Collections Sheriff” to follow up on the unpaid bills and write-offs. The motion asks that the City Administrative Officer, the Chief Legislative Analyst, the Controller and the Office of Finance evaluate creating the position and report back in 30 days. That it took so long for council action on a matter that seems simple was frustrating to Kohn but not one he and other VICA members backed away from. That he was finally getting through was evident after private meetings with Bernard Parks, chairman of the Finance Committee, and Council President Eric Garcetti. “It appears it is more than a nod of the head,” Kohn said. An attitude within the city bureaucracy that the money is long gone may explain why no attempts were made to collect, Garcetti said. “It’s a big amount and it’s in every corner of every department,” Garcetti said. “There is no one place with the mission of collecting these outstanding debts and fees.” That millions of dollars in bills went uncollected was first brought the council’s attention by City Controller Laura Chick in a June 2007 audit report that concluded that at any time the city was unable to determine its accounts receivable or what is owed by resident and companies using city services. These include ambulance transportation, industrial user permits, police response to false alarms, and expediting planning department cases. In addition, the audit found that approximately $502 million in bills had gone uncollected, including large amounts from more than five years ago. Not that VICA or the city expects to collect on that full amount but even a fraction would help close the budget deficit estimated at $406 million. When it comes to ambulance billing, some of those are for indigents who will never be able to pay, Greuel said, while some money is owed by businesses no longer in existence. “If it’s $10, $20 or $100 million that is a lot more than what we have today,” Greuel said. Just one-fifth of that amount would bring in more money than the increased trash collection fee earmarked to pay for more police, said VICA President and CEO Brendan Huffman. In July, the council approved raising the collection fee by 40 percent for residential customers. “What VICA objects to is, they are raising fees and cutting services but are not going after what they should be,” Huffman said. As a council member a decade ago, Chick said she attempted to centralize the collection process with a revenue manager but that effort didn’t produce results. As her office cannot enforce recommendations made in the audit reports, it takes a council member or an outside group such as VICA to make phone calls, write letters, speak at meetings and otherwise push for a follow up. “This is an example of what gets action: it’s called the squeaky wheel,” Chick said. A year ago the association formed its Audit Sub-Committee specifically to follow up on the reports issued by the Controller’s office. The collection practices report was chosen as the first to pursue because with each passing month the city loses out on the money that goes unpaid. An executive order issued by Mayor Antonio Villaraigosa in 2005 outlined the steps the city should take to maximize collection of fees and taxes. The Controller’s report found a lack of accountability in following those steps. “The guidelines are not followed but they are in place,” Kohn said. To ensure the guidelines are followed, VICA proposed the “Collection Sheriff,” a city employee working with all departments to enforce collections. Their duties can be done internally day to day, Kohn said. But Greuel said that she would like to keep her options open on who fills that position, as a person coming from outside with new ideas could prove to be beneficial. When the matter returns to the council in a month, Garcetti would like to learn what amount the city can collect immediately and what can be anticipated in the future The “Collection Sheriff,” meanwhile, would be empowered to sit down with department managers to see the books to find out the amounts owed, he said. While in the short term collecting the unpaid bills helps during a bad budget year; in the long term that money may keep the city from going to residents with fee increases, Garcetti said.