Ron Knecht and James Smack: What we’ve done at the Controller’s Office
September 21, 2017
This is our report to Nevadans after serving as Controller and Deputy Controller for two years and nine months.
Ron ran for Controller especially to promote transparency and accountability by providing regular analyses of state operations, spending and taxes. Helping Nevadans determine whether their tax dollars are being spent efficiently and effectively involves addressing claims made often in political debate.
Two such claims are that Nevada has a revenue problem and that the failures of our K-12 education system are due to underfunding. We produced reports showing that real (inflation-adjusted) per-person state spending on schools has increased 18 percent over the last decade while real per-person incomes of Nevada families and businesses fell by 9 percent. We highlighted the state's failure to make no- and low-cost reforms that would improve student achievement.
Health and social services spending rose even more, while all other state spending fell. So, total state spending grew 11 percent, or 22 percent faster than the growth of Nevadans' incomes. Because state revenues rose even faster, it's clear Nevada has a spending problem it needs to control, instead of raising taxes.
Another promise was to take good care of the day-to-day nuts and bolts, the ministerial work of the office. Ron promised to modernize the financial and accounting information system that connects all state agencies and to modernize and streamline state business processes. We and our management team and staff have worked diligently on this long-term project with the departments of finance and administration and all other state agencies and offices.
We inherited a large troubled contract to modernize and improve the debt collection operations, and we, the managers and staff have worked closely with the contractor, Attorney General's Office and department of finance to turn it around. The new system is now online and improving collections for 80 state agencies.
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Ron promised to put the state checkbook online for everyone to examine. This work has cost much less than expected, due to the good efforts of managers, staff and the contractor. However, as we were almost ready to go live with it, we discovered many state agencies have been putting personal identifying and confidential information into the primary computer systems. The online date has been delayed as we work with all state agencies to remedy this problem and avoid illegally compromising security and safety for Nevadans by exposing such information.
The bottom line: In our first full fiscal year, we cut Controller's Office spending by 13 percent from the budget proposed by the previous controller and approved by the legislature and governor. In the first two years, we returned over $1 million to the state treasury — a large amount for a small (43-person) office.
At the same time, we published Nevada's first two popular annual financial reports, which cover many issues and supply the basic data citizens need. They won awards. So did the comprehensive annual financial reports — again reflecting good work of managers and staff. Soon, Ron will be presenting major recommendations to Nevada's public employee retirement system to improve its assessment of its financial position and help make funding reforms.
In a recent book chapter on leadership for state financial executives, Ron called for leadership of thought, ideas and action. So, when the legislature was considering huge spending increases and Nevada's largest-ever state tax hike, Ron led a team of legislators, professionals and citizens in presenting an alternate budget that would: 1) grow state spending slightly slower than the Nevada economy; 2) provide for all the state's basic needs; and 3) not require a tax hike.
When legislators passed the massive tax and spending hikes anyway, Ron led the effort to put the new commerce tax to a referendum of the voters. Nevadans had previously defeated a similar gross receipts tax by 79-21. The state Supreme Court ruled late in the process that certain petition language had to be changed, killing that effort
However, Ron is again leading the effort. The current petition has already passed all legal hurdles with a full eight months to gather signatures — the effort now ongoing. As a bonus, repealing the commerce tax will help drain the political swamp by removing very pernicious features in that law.
Ron Knecht is Nevada Controller. James Smack is Deputy Controller.