Mooresville has forgiven hundreds of thousands of dollars in debt owed by former business owners and residents with unpaid utility bills from years ago.
The write-off cleared a total of about $366,000 in outstanding water and sewer bills that dated to at least the 2008-09 fiscal year. In addition, the town agreed to write off some $44,000 in back taxes that business owners failed to pay over the past several years, in the wake of a new state law prohibiting local governments from imposing new privilege license taxes starting in the 2015-16 fiscal year.
Unanimously approved by commissioners at a June 15 meeting, the write-offs were largely unavoidable, said Deborah Hockett, the town’s finance director. “The town always tries within any reasonable means to collect what is owed,” she said.
The write-off of the utility bills will not have a significant financial impact on the town, Hockett said. She noted that it charges between 13,000 and 14,000 customers each month, billing an average of $19 million in utility fees each year.
But it is noteworthy because it is the first time Mooresville has forgiven unpaid utility bills in, at least, recent years.
“We haven’t cleaned up our books in a while,” said Hockett, who is expected to go before commissioners each year with any recommendations involving debt collection.
A new state law prohibits cities and towns from collecting new privilege license taxes from businesses starting in July, and Mooresville officials decided to write off past-due privilege license taxes that it has never collected.
For Mooresville, the new law is expected to amount to a loss of $60,000 next fiscal year, Town Manager Erskine Smith said. The tax averaged about $20 per business each year.
The number of water and sewer bills the town failed to collect, less than 2,000, was probably lower than the actual number of customers who owed the town money, given that a single customer could have multiple bills.
It is likely that at least some of those unpaid bills preceded the 2008-09 fiscal year, when the town upgraded its accounting system and grouped together all outstanding utility bills during or before that fiscal year in the new system.
Accounting for most of the debt were commercial customers whose businesses wound up closing as a result of bankruptcy or other reasons, Hockett said.
For the residential customers, the town agreed to write off only unpaid bills of $25 or less. Many of those bills amounted a few cents, she noted, perhaps because a customer was unable to make a full payment.
Referring to such small amounts, Hockett said, “It’s not even worth pursuing.”
If a customer owes $50 or more in utility bills that have remained delinquent for 60 days, the town can report them to the N.C. Local Government Debt Setoff Clearinghouse. Run by the N.C. Association of County Commissioners and the N.C. League of Municipalities, the program helps send such information from local governments and other public entities to the state Department of Revenue, which collects debts through debtors’ state tax refunds and any N.C. Education Lottery winnings.
A total of more than 60 counties and municipalities have recouped more than $1 million in past-due debts since the program was created in 2002. The local government with the biggest recovery, $13.45 million, is Gaston County, followed by Mecklenburg County, with $10.15 million. Iredell County has recovered about $2.6 million.
So far this year, the program has returned nearly $15 million in unpaid debts, an official said.
Jake Flannick is a freelance writer. Have a story for Jake? Email him at firstname.lastname@example.org.