DMV computer glitch brings $19 million windfall to local governments

CARSON CITY — Nevada school districts and local governments received a $19.1 million windfall over the past three years because of a computer programming glitch at the Department of Motor Vehicles, state officials revealed Thursday.

The error was made in the distribution of a portion of governmental services tax imposed on vehicle registrations that were processed through an online portal called “My DMV,” which was set up in April 2013.

“No car register has overpaid or underpaid,” Mike Willden, Gov. Brian Sandoval’s chief of staff, told reporters.

The error only involved transactions made through the personalized Web portal, where customers can set up private accounts to keep track of their DMV business. Registrations processed at DMV offices, through the mail or the general DMV website were not affected. About 500,000 people currently have personalized portals, DMV Director Terri Albertson said.

Willden said school districts and local governments who benefited from the error will not have to repay the state general fund, where the collections should have gone.

“We simply have fixed the error starting April 1 and are going forward,” Willden said. “It’s real money … but it will not have significant impact on state operations.”

State of Nevada government services tax

The tax error amounts to roughly $6 million in each of the past three years out of a general fund budget of $3.4 billion annually at the time.

For governments in Clark County, including the county, cities, school districts, towns and library and fire protection districts, the total overpayment was $6.2 million. Those entities are being sent formal letters alerting them to what their actual revenue should have been.

Local entities around the state are finalizing budgets for the upcoming year.

“No individual motorist was affected by this error, but we sincerely apologize for any inconvenience it may have caused the local governments and school districts,” Albertson said. “It is important for them to have proper figures for budget planning.”

Most of the governmental services tax generated in Nevada’s 17 counties is returned to that county to help fund local government services and school districts. A small portion tied to a levy on the depreciation value of a vehicle goes to the state general fund.

The governmental services tax imposed on depreciation of vehicles generates about $63 million a year. In 2009, at the height of the recession, state lawmakers reduced the rate of vehicle depreciation and increased the minimum tax to $16 from $6 in an effort to shore up state coffers.

As far as the distribution error, “We’re only talking about the piece that deals with the slower depreciation rate,” Willden said.

Willden said the error was discovered when programmers began updating the system for new changes passed by the 2015 Legislature that take effect July 1. That’s when half the tax will go to the general fund and half to the state highway fund. In 2018, all the collections will be deposited into the state highway fund for road projects.

Contact Sandra Chereb at schereb@reviewjournal.com. Find @SandraChereb on Twitter.