Louisiana Republicans Vote Down Bill To Lower Fines On Personal Debt Collection

By Julie O'Donoghue, Louisiana Illuminator

April 13, 2023

15:52
News Story

• Govt + Politics
• Legislative

Louisiana Republicans vote down bill to lower fines on personal debt collection

By: Julie O'Donoghue - April 13, 2023 3:52 pm

State Rep. Denise Marcelle, D-Baton Rouge (Photo by Greg LaRose/Louisiana Illuminator)

A Louisiana House committee that handles tax and fines policy rejected a proposal Thursday to lower state fines primarily paid when a person’s auto insurance has lapsed. The vote on a watered-down version of the original proposal was 9-7, with most Republicans on the committee opposing it.

Rep. C. Denise Marcelle, D-Baton Rouge, filed House Bill 422 to shrink the state fine attached to outstanding payments referred to the state Office of Debt Recovery from 25% to 15%. The fine can often run into the hundreds of dollars and is added to the debt and late fees people already owe state and local governments.

“There’s many citizens of this state that cannot pay a fee on top of a fee,” Marcelle said. “Twenty-five percent is really too much to be charging people as a late fee.”

Louisiana Department of Revenue Secretary Kevin Richard said 128 state agencies and local governments use the Office of Debt Recovery to track down people who owe them money.

About two-thirds of those debt recovery referrals come from the Office of Motor Vehicles and relate to penalties assessed for gaps in vehicle insurance, Richard said. The agency also handles debt recovery for items such as parking tickets and missed parole payments.

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The 25% fine is used to cover the cost of running the debt recovery office, and Richard said he could work with a smaller budget, one relying on a 15% penalty instead.

At Thursday’s meeting, House Ways and Means Committee chairman Stuart Bishop, R-Lafayette, was responsible for scuttling Marcelle’s proposal.

He said the state revenue department might need the extra money earned from the 25% fee, especially because Gov. John Bel Edwards is seeking a minimum wage hike for all state government employees and other public employee pay increases.

Bishop effectively killed Marcelle’s legislation by forcing other Republican lawmakers to vote on the proposal. Up until that point, the GOP legislators appeared willing to keep Marcelle’s bill alive by letting it pass out of committee without a vote. Once Bishop forced them to go on the record with a position, most of the committee Republicans decided to vote against the legislation.

Democrats initially tried to keep the legislation alive by limiting its scope. They attached an amendment to the legislation that applied the lower 15% fine only to debt from the Office of Motor Vehicles, but the change didn’t satisfy Bishop or other Republicans.

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Bishop said the Edwards’ administration could use its regulation-making power to lower the fee from 25% to 15% without lawmakers’ taking action. The current law also allows the Department of Revenue to implement the smaller, 15% fee on its own.

But Marcelle pushed the law change because she doesn’t believe a 25% fine will ever be appropriate. While Edwards may agree to lower the fine now, another governor could raise it again. The only way to prevent that from happening is to put a lower rate in state law, she said.

Republican objections to Marcelle’s proposal were unexpected, given the Louisiana House voted unanimously for a similar proposal last year. That bill, also sponsored by Marcelle, failed to become law after stalling in the Senate committee.

The Office of Debt Recovery is only 10 years old. Former Gov. Bobby Jindal and lawmakers created it while looking for ways to bring more money into the state without raising taxes. At the time, having a staff devoted to tracking down people to repay their debt was pitched as a way to generate more funding for the state.

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The Louisiana Illuminator is an independent, nonprofit, nonpartisan news organization driven by its mission to cast light on how decisions are made in Baton Rouge and how they affect the lives of everyday Louisianians, particularly those who are poor or otherwise marginalized.