By Ray Stern
By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
The City of Phoenix regularly removes delinquent accounts from its records. Since May of last year, almost $15 million in civil traffic fines and more than $800,000 in criminal traffic fines have been "purged" from the court's receivable accounts. And since 1989, the city's finance department has erased more than $4 million from its delinquent water, refuse and wastewater accounts.
The purges came to light last week when Ahwatukee businessman Sal DiCiccio, who hopes to replace Kathy Dubs on the Phoenix City Council, did some poking into city finances. DiCiccio, 35 and a Republican, has served as district assistant to U.S. Senator John McCain and public information officer for Sheriff Dick Godbehere.
As an alternative to raising taxes to meet budget deficits, DiCiccio says, "If it were my own personal business, and I was having financial problems, what would I do? I'd look at my receivables." Union officials for city workers pointed him toward the Municipal Court.
According to Jim Scorza, Municipal Court administrator, the first purge took place in May 1992--$9.1 million for offenses dating from 1984-87--and purges have continued monthly since then, erasing an additional $5.7 million. Another $50 million in unpaid fines are still on the books.
When asked why the debtors are not pursued more rigorously, Scorza replied, "We're trying to reconstruct some of the reasons why." Phoenix has "an internal collection process" that Scorza says collects "65 percent of fines and fees imposed." He blames the relative inefficiency on the court's computer systems. He says that the city has run inconclusive pilot programs using collection agencies, and has concerns about methods that collection agencies use.
One such agency consulted by New Times speculated that a collection firm could recover 15 to 20 percent of the bad debt, and would then take up to one-third of that as payment for its services. The city would then have to turn 35 percent over to the state, according to Scorza. Nonetheless, that would amount to between $1 million and $2 million for the city, and a like amount for the state.
Whether collection agencies are the best solution remains to be seen. Scottsdale court officials claim their workers collect more than 90 percent of fines due and turn the remainder over to an outside collection agency. Mesa courts used to contract with a collection agency, but now rely on an in-house collection system, because "the court can take their driver's license and the collection agency can't."
Clerks from all Valley cities work with the state Motor Vehicles Division so that drivers can have their licenses and registrations suspended if they don't pay up. Mesa turns in the names of delinquents within 30 days. DiCiccio also looked into the water department and was told that about $1 million had been purged from its accounts receivable, a figure confirmed as "ballpark" by Tony Piasecki, customer service administrator for the department. In fact, the amount was larger.
Kevin Keogh, the city finance director, explains that unpaid water, wastewater and refuse pickup bills exceeding $30 are referred to the finance department after 30 days. If the delinquent customers can't be traced after 150 days, they are written off. According to figures from the finance department, more than $4.3 million worth of such bills have been written off since 1990. When asked if it would be sensible to turn those accounts over to an outside collection agency, Keogh responded, "It might be. In our judgment, they're uncollectible."
Mayor Paul Johnson isn't so sure. He says he and other members of the city council have "been complaining about collections for a long time. . . . I think we ought to bring in outside agencies."
Johnson is quick to add, however, that some offenders will always be difficult to collect from. "You have to take a look at who the customers are," Johnson says. "There are people who have difficulty paying their rent, much less their traffic tickets."
Since DiCiccio started asking questions, the city has formed an "ad hoc committee" with representatives from the court and the budget and finance departments to look into collections procedures, and that committee plans a report to the city council in early June.
"As a result of Sal's inquiry, we have decided not to purge any more pending an investigation," says Scorza.