Since the start of 2023, Nevada has written off more than $106 million in “bad debt,” meaning state officials have deemed it impossible or impractical to collect, according to a Nevada Independent analysis.
Four companies neglected to repay more than $1 million in debt each—two of which filed for bankruptcy—and four individuals also failed to pay off more than $1 million. The biggest offender was a Las Vegas man convicted of Medicaid fraud in 2013.
Collecting debt is a fundamental—yet underdiscussed—part of Nevada’s government, and there have been minimal changes to the process in the past decade, despite tens of millions of dollars not ending up in state coffers as they should.
The Indy spoke with the top state official overseeing the process and analyzed decades worth of unpaid debts to better understand why payments fall through the cracks and what the state does to prevent it.
Although unpaid debts have not disrupted any state programs or services—money from collected debts typically goes into a separate account that helps pay for collection services but is rarely tapped into: Deputy Controller James Smack acknowledged the amount of bad debt reinforces the work necessary to improve the process.
“If I’m looking at it from a taxpayer perspective … that seems like an awfully large number when you compare it to the percentage of the revenues we take in on an annual basis,” Smack said. “And so I can understand the concerns when constituents bring it to me.”
States have various processes to write off bad debt, with some having more defined timelines for when unpaid expenses must be written off. In Nevada, the goal is to get unpaid debts off the books after a decade, but no limit is enshrined in Nevada law. Some of the latest write-offs relate to debts from more than 30 years ago.
Some states with populations similar to Nevada, such as Utah and Arkansas, have not publicly reported write-off data.
Moving forward, Smack said the controller’s office is interested in looking into using an artificial intelligence chatbot that can interact with a debtor and complete any necessary transactions. The office is in talks with multiple vendors about this type of arrangement, which Smack thinks would improve collection rates.
