Thousands of South Dakotans have lost their privilege to hunt, fish and drive in the state because they owe the state money for unpaid fines, fees, taxes or even college tuition.
The license and registration suspensions were implemented by the state debt Obligation Recovery Center, known as the ORC.
Under state law, anyone who owes $50 or more to a government agency won't be able to get a hunting license, fishing license, state park entrance pass or make a state park camping reservation. Driver’s licenses and vehicle registrations can be suspended if the debt is greater than $1,000.
State officials say the suspensions are necessary to collect the more than $80 million owed to state agencies and departments for debts due to outstanding fees, fines and unpaid taxes.
Scott Bollinger, commissioner of the Bureau of Administration that oversees the ORC, said debt sanctions are a way for state government to pressure people who owe money and can help keep costs down for others.
“Ideally, if everyone paid their debts we’d probably have lower tuition rates, sales tax rates, whatever,” Bollinger said.
Created by the 2015 Legislature, the ORC is state government’s central debt collector. By June 30, 2019, state agencies had sent 122,353 individual debt accounts to the ORC.
Since 2016, the center has collected more than $8.7 million, according to its most recent annual report. Meanwhile, others have have started payment plans to satisfy their debts.
During the 2019 fiscal year that starts July, 1 2018, the ORC informed 18,000 people they’d be blocked from purchasing a hunting or fishing license in the state. Additionally, 3,000 people were notified that they couldn't renew their driver’s licenses and vehicle registrations that year unless they paid their debt in full or started a payment plan.
The South Dakota court system has been the largest beneficiary of the ORC’s efforts. Around $3.67 million has been collected for the courts since 2016. In fiscal 2019, $1.48 million worth of court-ordered debts was collected. A large portion of that was restitution for crime victims.
The Board of Regents, which is responsible for South Dakota’s public universities, has received the second-largest amount of collections. The state’s six public universities have received a little over $3.5 million since 2016. The Department of Corrections was next with more than $1.17 million over the last three fiscal years. The Department of Revenue has seen around $950,000 of debt collected.
The average debt referred to the ORC in 2019 was about $670.
Poorest hardest hit
Many who have faced ORC enforcement actions are among the state’s poorest residents who struggle to repay their debts and can least afford to lose the right to drive legally, according to critics who say the debt collection system is biased against them.
“Wealth-based suspensions create a two-tiered system of justice where rich and poor people with otherwise identical records receive different punishments solely because of their ability to pay, said Libby Skarin, policy director for American Civil Liberties Union of South Dakota. “Criminalizing poor people and balancing budgets on the backs of the poor is inherently unfair and it undermines the fairness and legitimacy of our legal system.”
Tomia Valdez, 42, of Rapid City, is on disability for a degenerative genetic condition and has custody of her 17-year-old son who is on the autism spectrum. She said her driver’s license has been suspended since 2017 because she owes the state $4,000.
The debt arose from a 2014 legal battle for which Valdez said she was assigned a public defender. She said she had been accused of neglecting and abandoning her son after they were evicted from their residence. She says the incident was a misunderstanding that took nearly two years to overcome in order to regain custody of her son.
In 2017, Valdez said she went to get her driver’s license reinstated after settling a separate legal issue but was denied and told of the $4,000 debt for the first time. Valdez said the debt will be nearly impossible to settle given her limited income.
“I can’t take my son fishing, I can’t take myself to the grocery store, I can’t take myself to medical appointments and my son is disabled,” Valdez said. “I can’t do anything.”
Debt collector a global firm
The ORC is largely a software system managed by CGI Technologies and Solutions. Many of its debt-collection functions are automated, but CGI also operates a call center for customer service and debt-collection phone calls.
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Headquartered in Virginia, CGI has become a global entity offering a wide variety of services including information technology outsourcing, business processing and consulting services to governments all over the world. The company says it has worked with 20 states on debt-collection programs and helped governments boost revenue by collecting $3.5 billion.
Daugaard Administration officials and CGI devised the central collections center. The governor told the Legislature that centralizing the process would be more successful by putting it into the hands of professional debt collectors.
To pay for it, any debts referred to the center would be assessed a 20% surcharge, which the debtor would be responsible for in addition to the debt.
The bill that created the ORC was written late in the session and narrowly passed the state senate. Some legislators argued that the ORC was being given too heavy a hand with the ability to suspend licenses and vehicle registration. Others argued the ORC would represent unfair public competition with private debt collectors.
Once money is collected, it gets deposited in the general fund and is sent to the appropriate agency, said Bollinger, adding that CGI only gets paid when a debt is collected.
Debtors who think they’ve been wrongly targeted or weren’t properly notified can ask for a due-process hearing in front of the Board of Hearing Examiners.
Bollinger said the referring agency does need to present evidence. From fiscal 2017 through fiscal 2019, debtors requested 46 hearings and 16 were dismissed or withdrawn, according to the ORC 2019 annual report.
Refusing to pay
Laurie Amundson said she got her first letter from the ORC in 2017. It said she owed more than $3,500. She had to call the customer service number listed in the letter to discover that the debt originated from about six years earlier. Her son had been sent to STAR Academy, the former Department of Corrections juvenile treatment facility outside of Custer, for around seven months, Amundson said.
The boy had been convicted of assaulting Amundson and stealing from her after committing other crimes, Amundson said. At the end of her son’s sentence, Amundson was required to pay $1,200 in restitution for damage her son had caused to a car before he could be released from the detention facility. At the time, no one mentioned anything about an additional $3,500 charge for room and board, Amundson said.
When Amundson found the ORC’s first notification letter in her mailbox in 2017, she was shocked.
“They told me that if I didn’t pay the bill, they would take my [driver’s] license away,” she said. “I told them, ‘Go ahead, I don’t drive anymore.’”
Amundson said the suspension doesn’t affect her much because she stopped driving and now lives in Vermillion, where she can get around town fairly well using public transit. The debt Amundson owes has been sent to Texas-based Municipal Services Bureau, the third-party collections contractor the state uses if the ORC’s efforts prove unsuccessful.
Amundson said she doesn’t think she should have to pay for a crime that her son committed against her and she can’t afford it. She’s out of work, partially because she suffers from chronic fatigue and fibromyalgia.
“My life shouldn’t be destroyed for something my son did. My privileges shouldn’t be taken away for something I didn’t even do,” Amundson said.
Obstacles to collections
A private collections agency is limited in what it can do by the federal Fair Debt Collections Practices Act. It can’t legally call at odd hours, contact someone else about the debt, use threats or intimidation, or lie to a debtor. Collection agencies can make deals to satisfy debts at lower costs to debtors. They can also work with credit bureaus and limit a person’s access to credit.
The 20% collection fee wouldn’t cover the cost of legal action, so the ORC doesn’t file lawsuits to recover debts, Bollinger said.
The ORC cannot negotiate with debtors who have been ordered by South Dakota courts to pay restitution, fines or court fees, which can make collections more difficult, Bollinger said. Court-ordered debts also cannot legally be written off, unlike most other debts.
Another problem is that roughly a quarter of the debt that has been referred to the ORC, roughly $20 million, is owed by more than 26,000 people from other states. Outside of reporting the debt to credit bureaus and barring someone from getting a non-resident hunting or fishing license, there’s not much the state can do to force them to pay, Bollinger said.