Credit Cards contract put on hold by Board of Examiners

The governor, secretary of state and attorney general on Wednesday delayed a new contract with Diners' Club for controversial credit cards issued to state workers for official expenses.

The cards, given to nearly 3,000 workers, are the subject of a growing concern because some employees have misused them or failed to pay monthly charges.

One snag when the new Diners' Club contract was presented Wednesday to the Board of Examiners was the company's decision to charge the state $10 per card each year because of those bad debts.

Gov. Kenny Guinn said under terms of the state contract, the bad debts are Diners' Club's problem, not the state's.

At issue is recent publicity over the $71,000 owed on state cards that Diners' Club has written off, and another $55,000 in debts more than 60 days old.

The card system was implemented nearly four years ago to replace a complicated and inefficient system that required the state Treasurer's Office to issue travel advances.

Those cards are now being used to handle more than $5 million in state business expenses every year. Under the Diners' Club contract, the total charges to all cards could be as much as $18 million in a year.

Attorney General Frankie Sue Del Papa said the debts are between Diners' Club and the employee cardholders, not the state.

But she said the state is getting the bad publicity as though it were somehow liable.

"When you issue a credit card, you're responsible for that credit card," said Guinn. "They're not going to charge us $30,000 because they didn't manage that. That's their fault."

He pointed to one ex-employee who hasn't paid more than $16,000 in charges for well over a year.

"They let somebody charge $16,000, but now they want to charge us," said Guinn.

"They want a riskless deal here," said Secretary of State Dean Heller.

Guinn pointed out that Diners' Club is still making 2-3 percent paid by the merchant on every purchase charged to the cards.

"We're talking really big business here," he said.

"I'm ready to say the heck with it," said Del Papa, who added that state workers are also right in complaining they shouldn't be forced to use the cards.

Some providers such as Southwest Airlines are now saying those Diners' Club cards are the only payment they will accept, which amounts to "coercing individuals to get the credit cards," she said.

At the same time, the state is unable to make employees pay the cards each month because they are considered private cards belonging to the employees.

State of Nevada Employees Association Director Bob Gagnier said he dislikes the system because it can affect the employee's credit .

Guinn said individual agencies should manage their travel accounts - issue advances or pay workers based on their receipts for trips on state business.

Deputy State Treasurer John Adkins told the Board of Examiners state law and regulations would allow either of those scenarios.

Guinn said it should be a simple matter for an agency head to decide how and when to spend travel money in the budget and to account for travel by the agency's employees.

But Perry Comeaux, director of administration, asked the board not to cancel the credit card program. He and Purchasing Director Bill Moell said the number of problem cards is actually small.

Moell to try to negotiate with Diners' Club to get the $10 per card fee waived.

Comeaux said the system has been managed by the Treasurer's Office but is now moving to Purchasing, which he believes can do a more thorough job of controlling expenditures.