$1 fee on DMV transactions likely to continue into 2022 amid troubled system upgrade

Riley Snyder
Riley Snyder
Customers at DMV

Nevadans are likely to continue paying a $1 fee on all transactions with the Department of Motor Vehicles for at least another two years to help pay for a delayed multimillion dollar computer system modernization project that has no timetable for completion.

Members of a legislative budget subcommittee on Tuesday granted initial approval to the department’s budget for the modernization effort now re-christened as the “System Technology Application Redesign” project, with lawmakers introducing a separate bill last week (SB542) that would extend the fee’s current sunset date of June 2020 to June 2022.

It’s part of an acknowledgement that the DMV’s efforts to update its decades-old computer system over the last four years have fallen flat, with a troubled contract to an outside vendor resulting in more than $12 million in unrecoverable sunken costs leading to a realization that the project will not be completed by its intended 2020 start date, despite previous statements by DMV leaders.

“We are at a critical juncture within the Department of Motor Vehicles, in that we have had two attempts at our modernization effort, and neither one of those has been successful,” DMV Director Julie Butler — appointed to the job in January — told lawmakers last month. “And so we are forced at this point to take a step back and reexamine our approach.”

The DMV is asking lawmakers to approve a budget allowing for a “baseline analysis” of the department’s current technology system and processes, with a handful of planned improvements and the intention to figure out next steps and timeline for implementation by June 2020. But the budget nonetheless requests continuation of the $1 fee paid for by Nevada drivers — which brings in an estimated $7 million per year — and which the DMV said was necessary to ensure available funding for the project in the future.

“Without a dedicated source of funding to modernize, the Department will continue to fall farther behind in its technological capabilities, ability to recruit staff to work on our antiquated IT platforms, and make positive changes that benefit Nevada’s citizens,” DMV spokesman Kevin Malone wrote in an email.

The continued delays on the project have irked some lawmakers, including Republican Assemblywoman Robin Titus, who cast the lone vote against the Department’s budget request on Tuesday. Titus said she was particularly bothered by the millions of dollars lost in a failed contract with an outside contractor and didn’t think the DMV’s new budget proposal had enough safeguards built in to avoid a similar situation.

“Now we’re going to have a new program, and I just didn’t see in that document that they gave us enough accountability, and how we’re going to track that that doesn’t happen again,” she said. “And it just wasn’t acceptable.”

The modernization effort began in 2015 when state lawmakers approved a request by the DMV to upgrade the department’s decades-old computer system through creation of a $1 “technology fee” assessed on all transactions from car registration to license renewals. At the time, the Department said the funds would go to a system-wide effort aimed at updating the department’s “antiquated” technologies based on decades-old technologies such as PowerBuilder and COBOL (Common Business Oriented Language).

The DMV awarded a $75 million contract to upgrade its system to a contractor, Tech Mahindra, in June 2016, but a scathing audit released last year found the modernization effort was months behind schedule and severely understaffed. The department dropped the contract with Tech Mahindra in January 2018.

The system modernization effort was rebranded as the “System Technology Application Redesign,” later in 2018 and again put out to bid, but only one company responded to the request issued by the DMV and was ultimately rejected by the department’s evaluation committee.

Although Gov. Steve Sisolak’s budget originally allocated $50 million over the budget cycle for the system modernization project, the department revised their budget request down to roughly $6.6 million over the budget cycle, with an excess $5.9 million in reserve dollars in the 2021 fiscal year in case the DMV needs the funds immediately to contract with an outside vendor to take up the modernization contract.

Instead, the DMV is asking to spend over the biennium:

  • $118,375 for customer-facing improvement to the DMV’s website, including a redesign and allowing the holders of driver authorization cards — given to individuals not legally in the country — to use the department’s website
  • $2.86 million for data cleansing efforts, including staffing and contractors to conduct a system-wide cleaning and ordering of all of the department’s records
  • $550,000 to contract with an outside vendor for a baseline assessment and “path forward” for the project
  • A $200,000 loan from the state’s Highway Fund (vehicle registration fees) as start-up costs for the other budget items -- to be paid back in the 2021 fiscal year

Butler said during the April hearing on the budget that she was cautious to operate off of any definitive timetable, but said generally the department expected the baseline assessment to occur sometime around January 2020 and to have a request for proposal issued sometime in late 2021.

Extending the $1 fee will likely be easier than might have been thought given the recent opinion by Legislative Counsel Bureau attorneys that extending a scheduled-to-expire tax does not require the typically required two-thirds vote for any tax increase.

The budget account also includes a requirement that the department semi-annually update the Interim Finance Committee on the status of the project. Democratic Assemblywoman Dina Neal, who chaired the budget sub-committee that recommended approval of the DMV’s budget account, said that aspect was important to her and that she was overall happy with the steps the agency is taking.

“They’re taking baby steps to make sure they can get this right, and they can make good decisions. I think the first wise decision was asking for $7 million versus $50 (million), and then trying to figure out what do you need and how do you get to your end result,” she said. “All I know is, I just want accountability for the money. I don’t want money to be wasted for another go-around.”

Butler said earlier this week that she planned to dedicate herself fully to the project — telling lawmakers that the project would have a dedicated team as opposed to assigning it as one of several tasks to DMV employees — while promising personal accountability.

“I cannot afford to take a hands off approach to this project and leave it in the hands of just the office and the contractors we solicit," she said. “We cannot afford to get complacent. We also cannot afford to do things like we’ve always done them.”


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