More than 600,000 Alaskans reveled in the news that their Alaska Permanent Fund dividend checks once again exceeded $1,000 after two years below the mark. Alaskans plan all year what to do with their dividends. Some buy cars, big-kid toys or catch up on bills.
But about 7 percent of those granted the coveted checks will see less than the full amount; many won't see a dime. They will, however, be paying off debts.
Each year, government officials and regular citizens garnishee the dividend checks of those who owe money. The procured money is used to pay off such debts as unpaid child support, student loans, taxes, fines, and attorney fees or for restitution for small claims judgments.
A few thousand other Alaskans who have debts voluntarily sign their checks over to pay their bills. These assignments can only be paid to government agencies, such as to housing authorities for mortgage payments, to courts for paying fines and restitution, or to governments for paying late taxes.
Alaska is the only state in the nation to offer creditors such an opportunity to cross off bad debts.
"A lot of people owe money who choose not to pay for whatever reason," said Dan Moore, Anchorage municipal treasurer. "Garnisheeing is a way for us to pay ourselves, to take the choice away from people who don't pay."
Moore and others like him work year-round to collect bad debts. But September and October are largely dedicated to garnisheeing PFDs.
"It's a key tool in terms of collecting money owed to the city," Moore said.
This year, the city submitted to the state a total of about $11 million from 35,000 past-due accounts.
The city currently has about 70,000 accounts from people who owe a total of more than $20 million. The number was closer to $30 million, until three years ago, when the city began publishing the list of delinquent fines on its Web site, a move to encourage people to pay off bad debts voluntarily.
The city has since collected about $10.5 million through the Web visibility and through PFD garnishees in those three years, Moore said.
The last several years, the city has collected through PFDs between $2 million and $2.5 million a year, only a portion of what it requests annually.
That's because other agencies, such as child support enforcement and the Internal Revenue Service, get first dibs on the money.
Each attempt to garnishee PFDs must go through a specific process. Agencies match their past-due debt list with a list of dividend applicants provided by the state.
Debtors and applicants are matched electronically using a three-point verification process, meaning agencies must match at least three identifiers, such as name, date of birth and Social Security number.
The list of matches is then sent to the state Permanent Fund Dividend office, which verifies the data from each agency, and compiles a list to determine who owes which agency how much money.
The dividend office pays the agencies, and any money left over is sent to the dividend applicant.
Government agencies can garnishee up to 100 percent of the dividend amount. Citizens looking for pay-off on small claims judgments can only receive up to 80 percent of the dividend.
While there's generally no interest collected on these bad debts, the added fees are a killer.
"People are better off paying now, even if it's late in the process," Moore said.
A $120 unpaid traffic ticket, for example, could wind up costing nearly $200 once it goes through a garnishee process after the collection fee, court fee and police training fund surcharge are added, said Mick Fornelli, senior administration officer with municipal collections in Anchorage.
"That doesn't fully recoup our costs," he said. "There are a large amount of new accounts that come in every day. "
Anchorage is also working on other methods to garnishee those who owe. Moore and his staff currently are working with banks and employers to garnishee the wages and bank accounts of city and Anchorage School District employees. Right now, it's a test program that has been used on about 500 people to collect nearly $60,000.
The program will expand to private employers soon, Moore said. Added costs then will include a hefty bank processing fee and the cost of involving process servers, making that $120 speeding ticket worth closer to $500.
"In a perfect world it would be nice if we didn't have to do this. But people need to realize if they choose not to pay, there are consequences," he said.
Melissa Campbell can be reached at melissa.campbell@alaskajournal.com.
