Tax agency must show progress

It’s not as simple as “ask, and you shall receive” for an agency with a less-than-stellar information technology record. First, it will have to make a case for what it’s done and what more it needs.

That is now the experience of the state Department of Taxation (DOTAX), which has been handed a rebuke from lawmakers controlling its budgetary request. The state Legislature rejected Gov. David Ige’s request for $18 million to continue its “Tax System Modernization” project, one of the governor’s top-priority projects at the outset of his administration.

And it has passed House Bill 1414 for good measure, a mandate for the state auditor to investigate the problems DOTAX has encountered rolling out its new computer system.

The bill is sitting on Ige’s desk, undergoing a review that has got to feel awkward. After all, Ige has been touting the idea of modernizing the state’s tax system since the start of his last campaign, and now he’s about to start a re-election bid.

The bill’s passage alone was a no-confidence vote the department will have to overcome. DOTAX must make do with its existing funds and make a stronger argument to earn more financial backing.

And there is good reason for all the skepticism from lawmakers: This is, after all, the agency’s second swing at the ball, after whiffing on a costly initial project. That agreement, signed with CGI Group Inc., cost $87.5 million for the installation of a system found to be outdated.

Further, legislators have a reasonable interest in seeing more incremental improvements in tax system functioning. State income tax refunds have been delayed by up to four months in at least two annual cycles, in 2015 and 2016. Refund checks are important to the real people out there; these are the results that count.

Whether or not the governor allows the audit requirement to become law, there is an embedded message in HB 1414: If the administration wants more money for the completion of the project, it will have to make a stronger argument that it is delivering the improvements Ige has promised.

State Auditor Les Kondo took no position on the bill but did observe a difficulty with it: Only the first phase is complete, with subsequent phases to roll out in August, November 2018 and July 2019.

“We suggest that it may be difficult to identify and assess operational issues relating to the tax system modernization project until the project is completed and there has been sufficient time for the department and users to identify any operational problems,” Kondo said in his testimony to the Senate Ways and Means Committee.

Department of Taxation Director Maria Zielinski told the same panel in March that the audit would duplicate reviews Ige has required.

This includes oversight by the hired consultant AdvanTech LLC, whose feedback to date is concerning.

For example, the most recent report in May cited the problems some taxpayers had in registering with the new system, a complication related to security controls that were built in.

Once taxpayers did manage to jump through those hoops, however, the new system did work, and the number of people registered to file excise taxes online increased from 70,000 to 93,000.

That much is encouraging, but user-friendliness does matter in a system that depends on voluntary compliance, said state Rep. Sylvia Luke — and she is right. Hitting arbitrary deadlines for the phased rollout should be expected of DOTAX, but that alone is not a mark of success.

The whole idea of tax modernization was to improve efficiency and raise collections, boosting state revenue — the campaign promises Ige made in 2014. If it’s going to fulfill that goal, it has to be built to work for everyone, including those with limited computer literacy.

Taxpayers already have paid too much for this, and now they deserve to see progress before any more is justified.