Council reviews debt
Washington City Council members, during the council’s meeting Monday, expressed concerns and disappointment with the city writing off slightly more than $1.75 million in debt that is more than five years old.
The write-offs are in accordance with the city’s policy regarding uncollectable accounts receivable. The largest write-off of $1.67 million was in the area of emergency medical services, mostly charges for EMS transports.
Councilman Bobby Roberson questioned the EMS write-off.
“The EMS charges represent charges that are on our books from 1994 up through 2007,” Matt Rauschenbach, the city’s chief financial officer, told the council.
“This is the first significant review and write-off of the City’s accounts receivable. The City utilizes late payment notices, liens where applicable, a collection agency, and debt set off to collect delinquent accounts. Once these efforts have been exhausted or the statute of limitations has expired the debt is written off,” reads a memorandum from Rauschenbach to the mayor and council.
“The thing that concerns me a little bit is … I’m a little bit disappointed in the auditors. When you have $1.6 million in bad debt, that should have been a notice to us in the (auditors’ annual) report. That’s a lot of money,” Roberson said. “Just hear me out. I’m saying, somehow, we’ve got to do a better job on that. Just arbitrarily writing it off and saying we’re not going to worry about it anymore, to me, that raises a flag. … I’m just a little bit upset when I see $1.7 million being written off.”
In 2010, the city began using EMS Management Consultants for billing and collection. Since 2010, collections for EMS services have improved from 50 percent to 72 percent, which is consistent with the industry norm, according to the memorandum.
City Manager Josh Kay said city staff would like to inform the council annually in regard to debt write-offs.
“Staff is aggressive in trying to go after those dollars that we’re owed,” Kay said.
Councilman Doug Mercer voiced his concerns about the write-offs.
Mercer said he believes the city is writing off debt it shouldn’t be writing off, at least not until further steps are made toward collecting those debts. Mercer said he’s curious as to why insurance companies are paying about 80 percent of EMS charges sent to them when Medicaid and Medicare pay about 95 percent of the EMS charges sent to them.
Roberson and Mercer also voiced concerns over other write-offs, including “miscellaneous” items in the sewer and electric funds, lot mowing and building demolition.
“If a see a miscellaneous sewer charge, it would seem to me that if an individual is still in the City of Washington and owes us money and he has water on, I’d go to that gentleman and say, ‘Sir, you owe the city $50. Pay the $50 or we’re going to cut your water off.’ I think that would encourage him to pay the $50.”
Mercer indicated the city might need to rethink its write-off policy.
“I can’t see writing off a million, seven hundred thousand dollars in this manner. I know we’ve got procedures in place, but I certainly hope that once we get this cleared up that we get an annual update and write-offs so we know where the devil we stand.”
For a complete list of the write-offs, see page 84 of the council’s May 14 agenda. That agenda may be obtained by visiting the city clerk’s office or the city’s website at www.washington-nc.com, then clicking on the “Government” heading, then clicking on the “City Council” heading on the menu to the right, then clicking on “Meeting Agendas” on the menu to the right, then clicking on the date for the appropriate agenda.