It pays Nevada governments to send work, cash to other states

I just sent a $10 check to Irving, Texas, so my cat, Mr. Darcy, is dutifully licensed by the city of Las Vegas.

This coincided with yet another e-mail asking if I knew why Nevada businesses send their sales tax bill payments to Phoenix for processing.

"It seems Nevada has shipped some of our jobs to another state to that state's benefit," Melinda Gorley wrote.

I get this question all the time and so do city and state officials. The answer is pretty simple. It's cheaper. I'm told no local banks have offered a check data processing center in Nevada. Even Nevada State Bank's check processing center, called a lockbox, isn't in Nevada. It's in Utah.

City of Las Vegas spokeswoman Diana Paul said many of the city's bills go to Phoenix because Wells Fargo provides the city's banking services. Sewer payments, parking tickets, business licenses and Special Improvement District payments are sent to Arizona.

"The utilization of these processing centers is very cost effective as it saves the city a great deal in personnel cost and overtime," Paul said.

Back to the priceless Mr. Darcy's $10 licensing fee. Once again, no in-state company bid on the contract.

The city found Pet Data in Texas was the lowest bidder and could do it more efficiently than city workers. Out of the $10 I paid for a neutered cat, Pet Data gets $3.75. That also covers the cost of the bill they sent me. Pet Data gets another buck if someone pays online.

Since Gov. Brian Sandoval has urged Nevadans to "buy local," does that mean the state will change its banking ways?

Not a chance, said Dino DiCianno, executive director of the Nevada Taxation Department. His department uses JPMorgan Chase in Arizona.

DiCianno gets this same question from lawmakers every legislative session. If he did it in-house, "I'd have to have 100 more people." That wouldn't be cost effective, especially now that state dollars are tighter than usual.

When the bids went out the last time, some Nevada banks bid, but they simply outsourced the work to a bank in another state. That would have taken longer, not a good thing in the banking world.

"I understand the creation of jobs concern, but this has to do with the efficient use of state money to process checks," DiCianno said.

Finally, I turned to my favorite banker, Bill Martin of Service1st Bank of Nevada.

"It's easy to say we need to have Nevada governments retain local contractors, and I like it as a matter of policy, but I think it conflicts with seeking the lowest cost-provider," Martin said. "Can you imagine the uproar if it was learned that little Service1st Bank of Nevada had the state contract but their bid was thousands per month more expensive?"

Especially when former Gov. Kenny Guinn was once the bank chairman and it could look like a juice job.

Martin had a real juice job banking story. In the mid-1980s, when he was with Nevada National Bank, it won the accounts for the Nevada college system. On the eve of a Board of Regents meeting, Nevada National Bank learned the contract was on the agenda again, without the bank's knowledge.

Although Nevada National rushed in a bid that was $1,000 a month cheaper than Valley Bank's, the regents moved the contract to Valley Bank, where popular banker Parry Thomas reigned.

When Regent Lily Fong was interviewed, she admitted it was more expensive, but said, "Parry had done so much for the community he deserved to have the accounts."

Today, she would be pilloried for wasting tax dollars and I'd be writing about juice jobs instead of explaining why some outsourcing makes sense.

Jane Ann Morrison's column appears Monday, Thursday and Saturday. E-mail her at Jane@reviewjournal.com or call 702- 383-0275. She also blogs at lvrj.com/blogs/morrison.