An increase in uncollectables

CHENEY – It may not seem like a lot, but the annual city practice of writing off uncollectable utility bills could grow larger over the next several years thanks to the COVID-19 pandemic.

At its Dec. 9 meeting, the City Council approved a resolution writing off $22,890.70 in uncollectable utility accounts resulting from utility bills under $50, small credits and bill from owners who have passed away with no collectable estates and accounts no longer within the legal period of collections. While less than the $32,282.06 written off in 2019, it’s still a lot more than the two previous years of 2018 ($848.90) and 2017 ($1,390.17) — and an amount at least one council member expressed concern about.

“I feel like there’s some big utility bills out there that might not ever get paid for next year,” Councilman Dan Hilton, owner of Hilton Realty, said in asking Finance Director Cindy Niemeier what 2021 might look like.

“It’s certainly a possibility,” Niemeier replied, adding she hopes residents are taking advantage of some of the utility bill assistance programs such as one set up in August by the city with the help of CARES (Coronavirus Aid Relief and Economic Security) Act. She added that organizations such as SNAP (Spokane Neighborhood Action Partners) also have assistance programs.

The city began the process of clearing its books of unpaid accounts 5-6 years ago, Niemeier told the council, because of the statute of limitations on how long municipalities have to collect unpaid utility bills. A couple of years ago the city raised the deposit required on services from $75 to $200 for all four of its services, something that’s reduced the number of unpaid bills.

“That’s made a big impact on our utilities and it’s made an impact on the number of final bills that we actually issue,” Niemeier said. “We issue more refunds than we do bills now.”

“Smaller bills are easier to collect,” she added. “I’m hopeful that was we continue down this path and those larger deposits come into play that you will see those numbers get smaller and smaller.”

But Hilton expressed his concerns about how this might play out given the coronavirus’ impact on the economy. Part of that has come from government restrictions preventing utilities from disconnecting services to customers who can’t pay their bills.

Niemeier said not having disconnect capabilities right now likely contributes to uncertainty over how many accounts might go unpaid and thus to collections and then potentially being written off. Once that capability is restored, there could be more evidence of the pandemic’s impacts on utility finances.

“I think there’s a good possibility we’re going to see some big bills come out of this,” she added.

Part of the reason for the significant jump in write offs the past two years is the timeline for collections, which is six years. The 2019 amount included accounts assigned to collections in 2011 and 2012, with this year’s figures including 2014.

In an email, Niemeier agreed those same circumstances could apply to unpaid accounts in 2020 and even 2021 resulting from the pandemic.

“Yes, if we are faced with large final bills after the pandemic no disconnect order is lifted, those will be sent to collections after we try to collect and will fall into the same collections timetable we see with other bills,” she said.

Those collections are for closed accounts, not active ones, Niemeier added. How many of those might be is hard to say, and she remains hopeful residents — over 90 percent of the accounts written off this year are residential — will take advantage of assistance programs.

“I see a lot of tenant utility bills, and it’s huge,” Hilton said at council.

John McCallum can be reached at [email protected].