APNewsBreak: Obama seeks debt collector proposal (AP)

WASHINGTON – To the dismay of consumer groups and the discomfort of Democrats, President Barack Obama wants Congress to make it easier for private debt collectors to call the cellphones of consumers delinquent on student loans and other billions owed the federal government.

The change "is expected to provide substantial increases in collections, particularly as an increasing share of households no longer have landlines and rely instead on cellphones," the administration wrote recently. The little-noticed recommendation would apply only to cases in which money is owed the government, and is tucked into the mammoth $3 trillion deficit-reduction plan the president submitted to Congress.

Despite the claim, the administration has not yet developed an estimate of how much the government would collect, and critics reject the logic behind the recommendation.

"Enabling robo-calls (to cellphones) is just going to lead to more harassment and abuse, and it's not going to help the government collect more money," said Lauren Saunders of the Boston-based National Consumer Law Center. "People aren't paying their student loans because they can't find a job."

Whatever the impact on the budget deficit, the proposal has aligned the White House with the private debt collection industry — frequently the subject of consumer complaints — at a time when the economy is weak, unemployment is high and Obama is embarking on his campaign for re-election.

White House press secretary Jay Carney told reporters the proposal is "just an acknowledgement of the fact that a lot of people have abandoned landlines and only have cell phones. As a matter of practicality, if they need to be contacted with regard to their debt, there has to be a way to contact them."

While Carney didn't say so, debt collection agencies are already permitted to call cell phones. The administration wants the law changed so the firms can use robo-calling.

Democrats in Congress who frequently support the president, including Senate Majority Leader Harry Reid of Nevada and House Democratic leader Nancy Pelosi of California, declined through aides to say whether they favor or oppose the plan.

Nor was there any reaction from two other members of the party's leadership in the Senate, Sens. Dick Durbin of Illinois and Chuck Schumer of New York. Both men frequently take the side of consumers in legislative struggles.

Several aides, speaking on condition of anonymity so they could talk freely, said Democrats do not want to oppose the president but are unable to support the request.

Mark Schiffman, a spokesman for ACA International, an industry trade association, said the administration "basically has come to the same solution we have" at a time when an increasing number of Americans have no landline phone to receive calls.

The change "is something we have been advocating for," he said, although he added his organization did not have direct discussions with administration officials in advance.

Schiffman noted that debt collectors have long been allowed to make robo-calls to landline phones. He said automatic dialing is a more efficient way to contact consumers who are overdue in their payments, and the industry wants it allowed in all cases, not solely those involving debts owed to the government, as Obama has proposed. Legislation along those lines was introduced in the House last week.

Federal law currently permits private debt collectors to use automatic dialing in trying to contact consumers on their landline phones. They also are permitted to make individually dialed calls to some cellphones.

The request comes at a time when the government is looking for ways to collect tens of billions of dollars.

According to a report by the Treasury Department's Financial Management Service, the Education and the Health and Human Services departments as well as FMS itself referred debts totaling $35.9 billion to private debt collectors in the 2010 fiscal year.

The Education Department accounted for the largest share by far — $28.8 billion referred to 22 private debt collection companies. The firms collected $685 million outright, and another $1.7 billion was recast into agreements that are designed to be paid monthly, according to the report.

Justin Hamilton, a spokesman for Education Secretary Arne Duncan, defended the proposal as an attempt to help individuals who fall behind on loans from the government. "It's a reality of the 21st century that a growing number of those who are delinquent "are using only a cell phone. If we can't reach them, we can't help them. And that's not good for students or for taxpayers," he said in an email.

According to written responses the department provided to questions, it hires private collection agencies in part so the government can gain "the benefits of greater collections" through the use of new technology that is developed by private industry.

Collection agencies can receive a fee of as much as 17.5 percent of the amount they recover.

A different federal agency, the Federal Trade Commission, collects extensive records about the private debt collection industry in general.

"The FTC receives more complaints about the debt collection industry than any other specific industry," according to an annual report to Congress, more than 100,000 in 2010.

The complaints fall into several categories, citing alleged harassment, demands for impermissibly large payments, failure to provide required consumer notice and threatening dire consequences such as jail time.

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APNewsBreak: Texas refineries may get back $135M (AP)

By RAMIT PLUSHNICK-MASTI, Associated Press Ramit Plushnick-masti, Associated Press – Mon Sep 26, 8:38 am ET

PASADENA, Texas – Three commissioners appointed by Gov. Rick Perry may grant some of the nation's largest refineries a tax refund of more than $135 million — money Texas' cash-strapped schools and other local governments have been counting on to help pay teachers and provide other public services.

The refund would mean more pain for some communities after a year in which state lawmakers had to grapple with a $27 billion shortfall and slashed spending on public schools by more than $4 billion. Nearly half the refund would be taken from public schools, and those in cities where the refineries are based would be hurt the most.

"We were already cut at the knees as it is, but more cuts? It's appalling," said Patricia Gonzales, a single mother of 13-year-old twins at Park View Intermediate School in Pasadena, a refinery town just south of Houston. Gonzales was just elected president of the school's new parent-teacher organization, which was formed this summer after the state budget cuts left the school lacking everything from pencils to paper towels.

The Texas Commission on Environmental Quality is evaluating 16 requests for the refund, which concerns a piece of pollution-controlling equipment. If granted, the refund total for those requests could add up to more than $135 million, according to county tax data and application documents analyzed by The Associated Press. What's more, agency documents show that if the commission grants the requests, at least 12 other refineries that have not sought a refund also could qualify.

The three-person commission last year expressed some support for the refund, prompting concern the panel is preparing to side with the industry in the middle of a budget crisis.

Should the commission approve the request, it would fall in line with Perry's argument on the GOP presidential campaign trail that by being friendly to business he has attracted businesses and jobs to Texas while other states suffered.

"Gov. Perry appoints individuals who are qualified and willing to serve, and expects they will consider all of the facts and make the appropriate decision," said Lucy Nashed, a spokeswoman for Perry.

The refund request has to do with a piece of technology used by refineries to minimize pollution. Beginning in 2006, the U.S. Environmental Protection Agency began requiring refineries to remove sulfur dioxide from diesel and gasoline in an attempt to reduce vehicle pollution. Many refineries had to either upgrade existing "hydrotreater" units or purchase new, more effective equipment.

Valero first asked for the refund for six of its refineries in 2007, and wants payment retroactive to that year. Since then, at least four other companies have joined in and asked for the same retroactive refund.

Valero is arguing that the units should be exempt under a Texas law that says industrial plants don't have to pay taxes on equipment purchased to reduce on-site pollution. The law saves companies millions, and is meant to encourage investment in new technology.

At first, the request was denied. The commission's staff said the hydrotreaters reduce pollution in diesel and gas, not necessarily at the plant. In fact, staff said, the hydrotreaters actually increased sulfur dioxide pollution near the refineries because the toxic gas is now burned off in a flare.

Valero appealed, and the panel's chairman, Bryan Shaw, said last April that the Legislature likely intended a broader interpretation of the law. He instructed his staff to research whether they could award partial exemptions to Valero. Shaw declined to be interviewed for this story, saying it could present a conflict because the issue will be brought before him again.

Valero alone could potentially get a refund of more than $92 million, but spokesman Bill Day said the San Antonio-based company believes the final refund — if approved — would be much smaller. He said appraisers will ultimately decide the value of the refinery properties and it's unlikely the numbers will be as high as those the companies noted on the applications they submitted to the commission.

There is no timeline for a ruling. The slow pace of decision-making has left municipalities and school districts in an uncomfortable position in which they collect — and spend — money they could be forced to return, acknowledged Susana Hildebrand, a chief engineer at the TCEQ.

"We don't have a statutory deadline, so there's not a legal impetus," she said. "I understand the concern that the taxing authorities have."

Refunding tax money would be yet another hit for counties, cities and school districts that are already cutting corners and improvising to make up for lost funds. Schools alone could be forced to fork over $62.8 million, according to data compiled by the AP.

In smaller, more rural counties — where property taxes from large industrial complexes provide a big chunk of funding for schools and government services — the impact could be greater. For example, in Moore County, where a Valero refinery is seeking exemptions on two units, a $15.8 million refund would amount to more than $720 per person.

"If it was a good year and property values were up it wouldn't be so bad," said Hugh Landrom Jr, president of Hugh Landrom and Associates, an engineering firm that does industrial appraisals for Galveston and other counties that are home to large refineries and chemical plants.

"It's compounded by the state budget cuts that are being passed down to everybody," Landrom said.

And because of a complex law aimed at evening the playing field between areas that have large refineries — and a strong tax base — and those that don't, all schools in the state would ultimately be impacted if the abatement is approved, though refinery towns would be hurt the most, said David Hodgins, consultant and attorney for the Texas Association of School Administrators.

"The dollars that are lost by these school districts directly affect the children of the employees that help make these companies what they are," Hodgins said.

For Gonzales and other parents in Pasadena, the prospect of the school district having to hand back money is terrifying. Already, the middle school her children attend has laid off eight staff members and is asking for parents to donate money to pay for basketballs, volleyballs and even gloves for the science teachers, Gonzales said.

The mom-turned-activist said she learned about the refineries' requests while lobbying earlier this year to convince Perry and the Legislature to dip into the state's so-called rainy day fund to ease cuts to the schools — an effort that failed.

Gonzales lives near a miles-long stretch of refineries, where massive pipes and stacks light the night like skyscrapers do in other cities. An intense, burnt chemical scent hangs over the town.

"You smell it. That's what we're known for. Stinkadena because of the refineries," Gonzales said. "There are days when we can't go out because our children's asthma is that bad ... and then they want money back?"

Valero said no one — not the refinery owners, municipalities, commission or appraisal districts — knows how much the industry could get if a refund is granted.

"It's not going to be a disaster," said Day, the company spokesman.

"I guarantee you, it's not a surprise to the school districts," he added. "Yes, they spent the money, yes we're asking for an abatement on our pollution control equipment ... but this is really no different than a homeowner appealing their property tax, just on a larger scale."

In the meantime, Gonzales and other parents are planning to sell "$10,000 brownies" — a gimmick aimed at raising awareness about how much money they would have to raise to make up for the lost refinery funds. The group also plans to boycott gas stations if necessary to fight the request.

"We pay taxes every day. Small businesses pay taxes. Why should big corporations get breaks?" she asked.

___

Associated Press writer Troy Thibodeaux contributed to this report from New Orleans.

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