The Technology Dividend: Growing Government the Stealth Wealth Way

By Representative Mike Nearman

For the third straight session, I serve on the Joint Committee on Legislative Information Management and Technology. In addition to the small smattering of policy bills that get presented to the committee, we have – at least for a short time – oversight of the various large Information Technology projects for state agencies that are in process at any given moment.

One project which is in the early stages is the DMV Service Transformation Project. As you may remember, back in the early ‘90s, the DMV embarked on a very expensive software project, which failed and eventually landed it as number two on the list of epic software project failures internationally. Today, haunted not only by their earlier failure but by the more recent high-profile failure of Cover Oregon, the DMV is just beginning to upgrade. The software they are using today is the same software that they were trying to replace nearly a quarter of a century ago. Yikes.

When these projects are first proposed, the committee is invariably promised that if only the millions of dollars are disbursed and the software project is completed, the agency will realize great levels of efficiency. As a student of economics, I know that efficiency frees up wealth, which begs the question: When a state agency creates efficiency through IT projects, what happens to the wealth?

Each agency has a mission, and, presumably, is funded to be able to achieve that mission. For instance, the Oregon Department of Fish and Wildlife oversees the management of Oregon’s wildlife. They need a certain amount of money to do that. If they find a way to work more efficiently, what do they do? Reduce their headcount, facilities, or assets, and return their money to the general fund, or to the taxpayers? I don’t see this. Ever.

So, the next time an agency comes asking for $30 million or more for a software project, promising new heights of efficiency, I think the legislature should expect that the agency re-divert the savings – and promise to do so up front, as in, “We need $30 million for a software project, and with the savings and efficiency, we will reduce headcount, and you may reduce our appropriation by $3 million per year for the next 10 years.” I call this the Technology Dividend.

A great example of how this could be powerful is the DMV project, which is projected to cost $90 million over 9 years. These dollars come from the Highway Fund, paid for by your gas tax dollars. Wouldn’t it be nice if this $90 million – or more — was returned to the fund over the life-cycle of the project and was used to pave roads and build bridges? I think this is what Oregon drivers expected their fuel tax to do.

Or maybe not. Maybe we think that we need to expand the scope and the size of government and we can hand out big chunks of change and have agencies re-adjust their mission as they see fit. Hmmm. Maybe not.

Mike Nearman is the Oregon State Representative elected from House District 23.