The Nevada DMV’s planned shift to an online-centered approach has received its first official thumbs up from state lawmakers, though many remain wary of the project’s nine-figure price tag after the agency’s well-documented past system modernization failures.
Members of a joint legislative budget committee closed the DMV’s budget during a meeting on Tuesday, the first stamp of approval by lawmakers on the agency’s proposed two-year budget.
A significant portion of the meeting focused on the agency’s System Technology Application Redesign project, aimed at updating the agency’s decades-old computer system, which is estimated to cost around $114 million for full implementation over the next four or five years.
Legislators said during the meeting that they wanted accountability assurances from the agency, while also giving initial approval to a host of other major DMV-related budget issues, including a decision to not eliminate dozens of vacant positions and approving spending around $10 million a year in credit card fees.
Though DMV leadership previously previewed the agency’s high-level budget requests and changes, Tuesday was the first time those recommendations and budget asks received at least initial legislative approval.
Here’s a look at some of the numbers that stuck out to us during the budget closing:
64: The number of currently vacant DMV positions that the governor’s budget initially called to eliminate, but was not accepted by lawmakers. The recommended cuts were linked to expected reductions in Highway Fund revenue for the department, caused by lower use during the pandemic and a redirection of 75 percent of car registration fees (the Government Services Tax) to the state budget during the 2020 special session. However, a revision to projected Highway Fund revenue in April presented a much rosier revenue outlook, leading the Governor’s Finance Office to recommend retaining all 64 positions. Keeping those positions — including 35 in the Field Services Division (direct customer service) — will help the agency “provide adequate staffing levels to perform essential tasks and reduce backlogs and wait times,” according to the budget closing document.
$20.9 million: How much the DMV is budgeting over the two budget years for credit card merchant fees on transactions. The number of credit and debit card transactions at the DMV has increased in recent years, going from 2.9 million transactions in the 2016 fiscal year to a projected 3.7 million in the 2023 fiscal year. The credit card processing fees are charged by Wells Fargo, which serves as the state’s credit card vendor.
$6.48: The anticipated average fee (by 2023) that the DMV has to pay on every credit card transaction, according to an analysis provided to lawmakers. Debit card transactions are substantially smaller — an estimated $0.49 fee anticipated over the coming two years of the budget cycle. Some lawmakers, including Assemblywoman Jill Tolles (R-Reno), said it would be “prudent” for lawmakers to look at shifting that cost to the public in future sessions to relieve stress on the DMV budget — though the agency said it was concerned that doing so would drive more people to pay registration fees in person, which takes more staff time and resources than just processing the payment online.
$232: The current average car registration fee for Nevada drivers.
6,000: Estimated number of programming hours that the DMV estimates would be needed to implement a new payment system where customers, not the DMV, pay the processing fee for credit or debit cards to Wells Fargo. The agency said it considers such merchant fees to be the “cost of doing business,” according to a budget closing document, while noting that changing the convenience fee structure could come up when the merchant services contract currently held by Wells Fargo goes back out to bid and when the agency finally completes its system modernization project.
$6.3 million: Recommended one-shot spending in the governor’s budget for advance planning of a new DMV facility on Silverado Ranch Boulevard in Las Vegas.
2026: How long the DMV and governor’s office want to keep the $1 per transaction “technology fee” in place. The fee, which was adopted in the 2015 Legislature, helps fund the agency’s system modernization project and is currently set to expire on June 30, 2022. However, the fee (along with an extension of a payroll tax rate) is being challenged in court by legislative Republicans, after both were approved in the 2019 Legislature without the two-thirds vote usually required for a tax hike. Because of the legal uncertainty, the agency is including enough reserve funding to make up any difference if the court rules that the extension of the fee in 2019 was unconstitutional. Extending the technology fee would come from a separate bill, and not through a budget committee.
$114.9 million: Estimated total cost to complete the DMV’s system modernization project over the next four years, including base budget expenditures and anticipated future costs for full-time staff, contractors, software purchases and travel. For the upcoming budget cycle, it includes 21 new state positions, 20 contractors and $44.8 million for software contracts and services.
$33.4 million: How much the DMV has spent since 2015 on the first (and ultimately aborted) system modernization effort. The DMV initially contracted with a company, Tech Mahindra, to run point on upgrading the agency’s aged computer system, but a scathing 2018 audit led the agency to drop the contract and reset the timeline. Assemblywoman Robin Titus (R-Wellington) said the sizable sunken cost made it crucial for lawmakers to hold the agency accountable, saying that “we haven't really gained anything with that $33 million except to know what doesn't work.”
Editor’s Note: This story first appeared in Behind the Bar, The Nevada Independent’s newsletter dedicated to comprehensive coverage of the 2021 Legislature. Sign up for the newsletter here.