Waste, hidden spending and records destruction

Lots of taxpayer money is being spent but not reported.

By Louis Dezseran
  • Thursday, August 14, 2008

A few weeks ago, the Nevada Policy Research Institute reported on the millions of taxpayer dollars spent by state and local governments to hire lobbyists to lobby other levels of government.

Now, further open records requests and audits have revealed that some local governments destroy their intergovernmental lobbying records so quickly that no public account remains to reveal exactly how taxpayer dollars are spent each year.

While responses to open records requests show that local governments reported spending just over $3 million to lobby the state government, a review of state audits revealed that an estimated additional $1.1 million, at least, was spent by local governments but not reported as required by law.

Either intentionally or inadvertently, therefore, local governments last year concealed an estimated one-third of their intergovernmental lobbying expenses from voters and taxpayers. Moreover, given this pattern of misrepresentation, local government's actual spending on such lobbying since 1999 may well be significantly higher than the $10.6 million they have officially reported. Possible supporting evidence comes from some relatively small government entities – such as two different water districts that each estimated spending some six figures on lobbying in 2007 alone. 

Under Nevada law, some government lobbying expenses need not be reported. NRS 394.59803 exempts any such expenses under $6,000 per Legislative Session. However, only $17,731 of the estimated $1.1 million that went unreported would fall under this exemption.

In one important instance, the City of Reno did not report any spending on intergovernmental lobbying last year until NPRI reviewed their financial statements and asked a state budget analyst about the discrepancy. That analyst in turn contacted the city and obtained a report of $280,011.57. This report, turned in several months late, may not have been made had it not been for NPRI's inquiries.

That such a sum of taxpayer money was spent and not reported to the state suggests a strong likelihood that additional taxpayer money is being spent under the table elsewhere as well. Moreover, not only is much of the spending on lobbying hidden, some of it will never be found because local governments are rapidly destroying their financial records.

For example, state responses to open records requests show that the City of Mesquite spent $51,000 on gifts and entertainment related to lobbying between 1999 and 2001. When NPRI requested details from the city on the actual gifts and entertainment purchased, the city's answer was that all records of those expenditures had been destroyed – without being backed up via any computer system.

It does not necessarily follow that local officials in Nevada intentionally concealed significant expenditures in order to dupe taxpayers. In some cases, it appears bureaucrats may simply be confused. A content analysis of intergovernmental communications revealed a candid e-mail from one bureaucrat, stating, "With two years in between reports, it's hard to remember who does what."

Of course, administrative officials not knowing who does what is clear evidence of a broken system. The need for reform is obvious.

While citizen lobbying serves an important and constitutionally protected purpose in the American political system, the amount of money lobbyists spend and the type and value of the gifts that they give clearly needs to be made public. This is especially true when government officials are using taxpayer funds to lobby other government officials and agencies.

Nevada law should be amended to require that a specific official in each local government entity is personally accountable for reporting this spending to the state and the public. Government bureaucrats – and voters – need to know "who does what." Further, detailed records must be preserved for the public. If the records are on paper, they should be digitally scanned and saved on a server.

As Nevada's economy continues to struggle, it is increasingly apparent that fiscal transparency reforms should be a high priority for the state. Intergovernmental lobbying and proper records retention are two areas of reform where greater transparency and accountability will end up saving taxpayer dollars.

Louis Dezseran is a researcher for the Nevada Policy Research Institute.

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