By: Phelan	H.B. No. 3762

	A BILL TO BE ENTITLED
	AN ACT
	relating to the recovery of certain debts owed to this state;
	authorizing fees.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Chapter 321, Government Code, is amended by
	adding Subchapter B and to read as follows:
	SUBCHAPTER B.  COLLECTION OF DEBT OWED TO STATE
	Sec. 321.551.  DEFINITIONS. In this subchapter:
	(1)  "Account" includes any demand deposit account,
	checking account, negotiable withdrawal order account, savings
	account, time deposit account, money market mutual fund, or any
	type of mutual fund account, and intangible property.  The term
	account does not include amounts held by a financial institution as
	collateral for loans extended by the financial institution.
	(2)  "Debt" a legal non-tax related obligation to pay
	money, including any principal, any interest that has accrued or
	will accrue until the debt is paid, any penalties, any costs, and
	any other charges permitted by law.  The term debt includes any
	non-tax related obligation of any kind referred to the SORC for
	collection by the state, government, or any government agency, by
	the Judicial System, or by the State higher education system.
	(3)  "Debtor" means a person who is indebted to the
	state, government, or any government agency for any delinquent
	accounts, charges, fees, loans, taxes, or other indebtedness due,
	or any obligation being collected by the SORC.
	(4)  "Employee" means any person or entity that
	performs services for another and includes a debtor acting as a
	contractor, subcontractor, distributor, agent, or in any
	representative capacity in which the debtor receives any form of
	consideration.
	(5)  "Employer" means any person or entity that pays an
	employee to do a specific task or tasks.
	(6)  "Financial institution" any financial institution
	and any other depository institution, credit union, benefit
	association, insurance company, safe deposit company, bond fund,
	money market mutual fund, and any mutual fund of any kind or
	character.
	(7)  "Final debt" a debt that is no longer subject to an
	appeal.
	(8)  "Final notification" the notification provided by
	section 12 of this Act.
	(9)  "Referring entity" the entity referring the debt
	to the SORC for collection.
	(10)  "State Obligation Recovery Center (SORC)" is not
	a state agency and means a benefits funded contractor procured as a
	third-party to recover debts owed to the state.
	(11)  "Wage" means any form of compensation due a
	debtor and includes wages, salary, bonus, commission, or other
	payment directly or indirectly related to consideration for the
	performance of a service.
	Sec. 321.552.  DUTIES. The SORC shall work to collect every
	debt referred to the SORC.  Exceptions to the use of the SORC are
	permissible if the debt includes HIPPA data.  The SORC is not a debt
	collection agency.  The character of the debt in the hands of the
	referring entity does not change by the referral of the debt to the
	SORC for collection.
	Sec. 321.553.  ANNUAL ASSESSMENT OF OUTSTANDING DEBT.  The
	third-party vendor selected by the state auditor to operate the
	SORC shall preform an annual assessment of all outstanding debt
	eligible for referral to the SORC.
	Sec. 321.554.  GENERAL POWERS. The SORC shall have the
	ability to use the referring entity's statutory collection
	authority to recover the obligations owed to the referring entity.
	The SORC shall also have the authority to:
	(1)  Sue;
	(2)  File liens;
	(3)  Enter into payment agreements with debtors;
	(4)  Impose a cost recovery charge;
	(5)  Collect data for obligation recovery purposes;
	(6)  Establish and maintain a centralized electronic
	obligation registry;
	(7)  Exercise the settlement authority granted to it by
	the referring entity;
	(8)  Provide information to the motor vehicle division
	of the Department of Revenue regarding the non-renewal of
	registrations for motor vehicles, motorcycles, boats or other
	conveyances;
	(9)  Provide information to any unit of the state
	regarding the non-renewal of professional licenses;
	(10)  Provide information to the Department
	responsible for hunting licenses and fishing licenses regarding the
	non-issuance of hunting and fishing licenses;
	(11)  Impose an administrative wage assignment
	process;
	(12)  Establish and maintain a financial institution
	data match system;
	(13)  Impose an administrative bank levy process;
	(14)  Set-off against any monies to be paid by the state
	to a debtor for any obligation owed by the debtor;
	(15)  Contract with collection agencies for the
	recovery of an obligation on behalf of the SORC;
	(16)  Utilize any other obligation recovery methods
	authorized by state law; and
	(17)  All other authority granted to the SORC by this
	Act.
	(b)  The SORC may determine which method or combination is
	most suitable to recover the obligation.
	(c)  A state debtor may be prohibited from renewing,
	obtaining or maintaining the following licenses or registrations
	unless the obligation and cost recovery charge is either paid in
	full or the debtor has entered into a payment plan with the SORC and
	the payment plan is current:
	(1)  Any registration for any motor vehicle,
	motorcycle, boat, or other conveyances;
	(2)  Any professional license; and
	(3)  Any hunting license or any fishing license.
	Sec. 321.555  COLLECTION CHARGE.  (a)  To fund its
	operations, the SORC will collect a cost recovery charge, which
	shall be 20 percent of the principal amount of the obligation.  All
	methods available to recover any obligation referred to the SORC
	are available to the SORC for the collection of the cost recovery
	charge.  The SORC shall retain the cost recovery fee and transfer
	any monies collected from a debtor to the referring entity within
	thirty days after the end of the month in which the monies were
	collected.  If the amount recovered is less than the obligation and
	the cost recovery charge, the amount recovered shall be prorated
	between the referred obligation and the cost recovery charge.
	(b)  Prior to transferring any obligation to the SORC, the
	referring entity shall send a final notification to the debtor that
	the obligation will be referred to the SORC and a 20 percent cost
	recovery charge will be added.  Challenges to any obligation
	recovery by the SORC may be initiated only in writing and by the
	debtor.
	(c)  Any executive branch agency shall use the SORC to
	collect any executive branch agency debt.
	(d)  The Judicial System may use the SORC to collect any
	costs, fines, fees, or restitution ordered in any adult criminal
	proceeding.
	(e)  The state higher education system may use the SORC to
	collect any debt owed within the state higher education system.
	(f)  All local governments, including municipalities,
	counties, and townships, may use the SORC to collect any debt owed
	them.
	Sec. 321.556.  INFORMATION FOR COLLECTION.  (a)  The SORC
	shall keep any information regarding any obligation referred to the
	SORC confidential.  Notwithstanding any law to the contrary,
	referring entities are authorized to transmit data to the SORC
	deemed necessary by the SORC to aid in the obligation recovery.
	(b)  Information a referring entity provides to the SORC may
	be used only for the purpose of collecting a referred debt.
	Sec. 321.557.  REMITTANCE AND DEPOSIT OF COLLECTED AMOUNTS.
	(a)  Except as provided by Sec. 321.554 a contracted third-party
	vendor shall remit to the referring entity all amounts the
	collector collects on debts transferred to the SORC.
	(b)  The referring entity shall deposit the remitted amounts
	to the credit of the same funds or accounts to which the money would
	have been deposited if collected by the referring entity.
	(c)  If more than one debt owed by the debtor is transferred
	to the SORC, amounts recovered from the debtor and allocated to each
	referred debt in the order in which the debts were referred to the
	SORC or, if the debts were referred concurrently, are allocated
	proportionally to each debt.
	(d)  Any payment of any kind to be made to a debtor by the
	state, when the debtor has an obligation that is referred to the
	SORC, is subject to offset by the SORC unless the obligation and
	cost recovery charge is either paid in full or the debtor has
	entered into a payment plan with SORC and the payment plan is
	current.
	(e)  Notwithstanding other statutory provisions which
	provide for execution, attachment, garnishment, or levy against
	accounts, the SORC may use an administrative wage assignment or
	administrative bank levy process to collect the debt referred to
	the SORC.
	(f)  If the SORC is unable to recover the referred
	obligation, the SORC, with the approval of the referring entity,
	may forward the obligation to a collection agency, which is
	permitted to add a collection charge.
	Sec. 321.558.  ANNUAL REPORT. Not later than October 1 of
	each year, the state auditor shall provide a written report to the
	legislature concerning the collection of referred debts under this
	subchapter during the preceding state fiscal year.
	Sec. 321.559.  RULES. The state auditor shall have the
	ability to promulgate rules for operation of the SORC and shall
	implement this subchapter by December 31, 2017.  The SORC shall
	maintain the necessary data to provide statistical measurements of
	the operation of the SORC as provided in this Act.
	SECTION 2.  This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution.  If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect September 1, 2017.