AGENDA #4d
MEMORANDUM
TO: Mayor and Town Council
FROM: Roger L. Stancil, Town Manager
SUBJECT: Request to Participate in the North Carolina Local Government Debt Setoff Program
DATE: September 11, 2006
The attached resolution and memorandum of understanding and agreement would permit the Town of Chapel Hill to participate in the North Carolina Local Government Debt Setoff Program as a means to expand opportunities to collect delinquent accounts.
BACKGROUND
The Town of Chapel Hill occasionally has delinquent accounts receivable from various sources such as stormwater fees, garbage fees, library fines, etc. We currently have limited means of collecting these relatively small accounts outside of delinquent notices.
DISCUSSION
The North Carolina Debt Setoff Program provides a means to collect these debts by sending them to a clearinghouse and having them setoff against any funds held for the individual(s) by the State. The debts that would be off-set would be standard items collected by the Town such as stormwater fees and garbage fees owed by individuals. The NC Debt Setoff Program can only be used by North Carolina local governments for debts owed by individuals, rather than corporations. The Town would notify any individual before the debt was forwarded to the North Carolina Debt Setoff Program. We would not intend to use the program for zoning violations or other items where there is an established appeals process.
The debts are primarily setoff against income tax refunds but they can even be setoff against lottery proceeds. If an individual does not have a tax refund or other State held funds owed them, the State would not attempt to recover the funds by other means. Over $10.2 million has been recovered by North Carolina municipalities and counties so far in 2006 through this program.
The summary of State-wide recoveries from the inception of the program through 2005 is as follows:
|
Year |
Amount Returned |
# of Setoffs |
|
2002 |
$ 234,248.89 |
1,541 |
|
2003 |
$ 1,062,874.85 |
6,447 |
|
2004 |
$ 5,801,032.96 |
37,020 |
|
2005 |
$ 8,555,754.32 |
57,190 |
|
Total: |
$ 15,653,911.02 |
102,198 |
Specifically, the program requires that the debt must total $50 or more for each individual taxpayer but can be comprised of one or more separate debts added together. The debtor must be notified in writing that the debt is about to be turned over to the debt setoff program and given 30 days to respond. If funds are located for setoff, a $15 fee will be added to the amount charged against the refund. There is no cost to the Town to participate. For additional detail see Attachment 1, Memorandum of Understanding, and Attachment 2, Letter of September 9, 2005 from David Thompson and Ellis Hankins highlighting 2006 changes in the setoff program.
RECOMMENDATION
We recommend that the Council adopt the resolution authorizing the Town Manager to execute the memorandum of understanding and agreement to permit the Town of Chapel Hill to participate in the North Carolina Local Government Debt Setoff Program.
ATTACHMENTS