More Good News from the Nevada Controller’s Office

By Ron Knecht and James Smack

In 2016, we reported that we cut Controller’s office spending by 13 percent from the budget we inherited from the Legislature and Governor based on the request of the previous Controller.  So, we were able to return over $1-million to the state treasury in our first 18 months in office to mitigate taxes and fund other state activities – all while expanding and improving our services.

In overall government finance, $1-million is not a lot.  However, the Controller’s budget is a very small part of state spending and operations.  If all state agencies made a one-time 13 percent cut in their total spending in 18 months, the savings would be $1.065-billion per year.

Our experience shows that significant cuts often can be made without diminishing state services.  If all agencies had made only seven percent savings in 2015 and the first half of 2016, Nevada would have been able to completely avoid the largest-ever tax increase (including the Commerce Tax) the Legislature passed and Governor signed in 2015.  That increase was $0.6-billion per year.

Further, a group of legislators, professionals and citizens led by Ron proposed an alternative budget during that legislative session that would have increased the growth rate of spending by slightly more than the growth rate of incomes of Nevada families and businesses — and yet still not required any tax increase at all.  In their haste to tax and spend, the Legislature and Governor ignored it and plunged forward with the tax hikes.

Politics is partly about having the will to make tough but necessary choices.  Our Legislature and Governor don’t have it.  When Ron ran for Controller, he promised openness, transparency and accountability that would have avoided the spending and tax orgy, and we’ve delivered on that.

But public administration and politics are also about taking care of the day-to-day ministerial functions and the nuts-and-bolts back office functions. When Ron ran for Controller, he made just as big a deal about those as the higher profile matters.  And the team we’ve had the pleasure to lead the last three-and-a-half years has done a fine job there too.  Today we can report a stellar example.

We inherited from the previous Controller a troubled major information technology (IT) project intended to improve the state’s collection of overdue debts, long a serious problem area.  The troubles sprang partly from lax administration of the contract for the project but mainly from the fact that the contract, while good in concept, was seriously flawed in its details.

We soon learned the project was seriously behind schedule, relations between the contractor’s staff and ours were rapidly deteriorating, and the system wouldn’t meet the state’s expectations and needs.

Serious schedule, performance and cost problems are all too typical with major IT projects.  Here, cost problems were mitigated by the structure of the contract, but if the final product performance issues could not be fixed, the cost problem was almost certain to manifest itself as major costs and delays due to litigation.

We and our whole team worked closely with the Attorney General’s office to avoid litigation if possible, but prepare fully in case it was unavoidable.  We also communicated clearly and timely with the contractor that the product performance goals had to be met That included writing a couple of long, detailed letters answering points they raised and making our position and demands unmistakable.

The contractor replaced key members of their team and we made some changes in ours until we had personnel who could communicate effectively and work together toward the joint goal of making the system work right as soon as possible.  Our team, the AG’s office and the contractor were all helped at key points by now-retired state budget director Jim Wells.

Ultimately, after two major and difficult contract revisions and a lot of good professional work by many people, the project became operational about a year ago.  Recently, we got the numbers from the first year of system operation: Debt collections increased by over $1.25-million from the previous year, or nearly 3.6 times!

And it’s not a one-shot deal.  Future collections will be much higher than previously expected, too.  We hope all agencies can make similar future gains.

Ron Knecht is Nevada Controller.  James Smack is Deputy Controller.

This article was provided to The Storey Teller and is printed here with Mr. Knecht’s express permission.