Municipal Receivables Management

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(To see a complete executive summary, click here)

Since the early 1980s, declining federal support for municipalities has forced cities and towns to actively seek more varied and creative strategies to maximize revenue. But as those governments issue more debt, rising debt service payments threaten their ability to contend with broader economic slowdowns and unforeseen expenditures

Municipalities are larger financial players than might be expected.
They generate roughly $1.25 trillion in revenues each year, a surprising 11% of U.S. GDP.
Amount of delinquent receivables owed to U.S. municipalities is estimated at approximately $40 billion.

Below are some receivables management strategies that have been implemented by certain cities:

Norfolk, VA, has begun tagging taxpayers’ state income returns for garnishment if the person owes past due parking tickets.
New Haven, CT, has employed a mobile infrared device that scans automobile license plates and checks the owner against a database of debtors in order to collect on various municipal debts. In the first six months of operation, this resulted in 1,800 impounded cars and $1 million in collected fines.
San Francisco, CA, developed a corporate program for companies like UPS that have more than 20 vehicles and a history of parking violations. The companies are billed monthly for any violations and avoid late fees and vehicle booting. The program netted more than $1.5 million in fiscal 2006.
Augusta County, VA, utilizes collection agencies to collect on unpaid library fees. This effort has recouped more than $100,000, representing more than half of the county’s annual budget for new library materials.
Portage and Cuyahoga Counties in Ohio place delinquent accounts with a collection agency, but charge the agency’s fees to the debtor; thus the county incurs little out of pocket costs for the program.