COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Employee & Public Services

DATE:

November 16, 2005

BOARD MEETING DATE:

December 6, 2005

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

Mary Welch, Employee & Public Services Director

Girdie Bernard, Revenue Services Division Manager

SUBJECT:

Agreement with State of California Franchise Tax Board

RECOMMENDATION:

Adopt a resolution authorizing the President of the Board of Supervisors to execute a three-year agreement from January 1, 2006 through January 6, 2009 with the State of California Franchise Tax Board to provide collection services for selected accounts.

VISION ALIGNMENT:

Commitment: Responsive, effective and collaborative government.

Goal(s): Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain.

This Agreement with the Franchise Tax Board supports this commitment and goal by contributing to the overall collections for the Revenue Services Division.

Performance Measure(s):

Measure

FY 2004-05
Actual

FY 2005-06
Projected

Dollars Collected

$16.3M

$18M

Percent of accounts collected

31.0%

50%

BACKGROUND:

The Revenue Services Division of the Department of Employee and Public Services recovers funds due to the County from individuals for services rendered and for court-ordered payments. As part of the County’s collection effort the division refers accounts to external collection agencies when County collection efforts have been exhausted. External collectors such as the State have access to information databases for locating debtors that the County does not have. In this way, the County assures that all practical efforts at collection have been pursued.

DISCUSSION:

In an effort to reduce the amount of court-ordered debt owed in the state, the California Legislature authorized the Franchise Tax Board (FTB) and county superior, municipal and justice courts to form partnerships to collect court-ordered debts. FTB collects criminal fines, penalties, forfeitures and restitution orders, as well as most Vehicle Code violations. FTB’s Court-Ordered Debt Collection program is authorized under Section 19280 of the California Revenue and Taxation Code.

In locating an individual’s assets, FTB has the ability to search through more than 220 million income records, including wage information on all California employees and interest and dividend information on all California accounts. Once assets are located, FTB can issue levies that are not limited by intrastate jurisdictional boundaries. FTB also has the authority to seize real and personal property, such as vacant land, cash, safe deposit boxes, vehicles and boats.

By continuing this partnership with the State, Revenue Services will broaden the scope of collection resources available for securing debts owed to the County. This agreement will assist Revenue Services in maximizing our collection efforts. Utilizing the Franchise Tax Board to assist with collections for the County was also recommended by the County auditors.

The State requires all Counties who enter into such collection partnerships to sign the State’s standard contract for such matters. In reviewing the standard contract from the State, we observed that their non-discrimination clause does not speak to discrimination due to a person’s sexual orientation; however, the State Attorney’s office will not approve changes to the language.

FISCAL IMPACT:

The amount of the contract will be based on the amount of revenue collected by the Franchise Tax Board. Their collection fee is 15%. This contract will be for an amount not to exceed $400,000 over a period of three years. If collections exceed projections, we will request a modification to increase the total amount of the contract.