State tax director resigns amid computer controversy

State Tax Director Maria Zielinski has abruptly resigned in the wake of a report that revealed state tax officials instructed a supposedly independent consultant on which subjects should be addressed in its monitoring reports on the progress of a new $60 million tax computer system.

The tax department also requested changes in the reports by consultant Advan­Tech LLC before they were made public, which the consultant said is “not the norm” in its experience.

AdvanTech is an “independent verification and validation” consultant that was hired under a $1.43 million contract to help the state implement the Tax System Modernization project, or TSM.

The consultant’s job is to monitor and report on the execution of the multiyear tax department project, and to make sure it functions as the contractor promised it would. According to AdvanTech, the TSM project is the largest technology initiative now underway in the state.

House Finance Chairwoman Sylvia Luke last week described the latest AdvanTech report as “shocking” because it revealed tax department administrators in charge of the computer project “have manipulated the contents of this report.”

Ford Fuchigami, administrative director for the governor’s office, said Zielinski informed him Monday that she was resigning. He declined to say if she was asked to resign, adding that he cannot discuss a personnel matter.

When asked if Zielinski was resigning because of issues related to the TSM project, Fuchigami said: “At this time, I would say no. Maria basically, again, made the decision. Again, I wish her all the best, I wish her well, but until I get more information, I really can’t respond to that.”

In a brief email to tax department staff Tuesday afternoon, Zielinski wrote: “I wanted to let you know that today is my last day in the office. I want to thank all of you for your hard work and dedication to (the Department of Taxation). While there are likely to be some (hurdles) and bumps along the road in the coming year, I believe you will all endure and be stronger from it.

“I plan to be moving back to Maui once I have tied up all loose ends here in Honolulu. It was an honor working with all you,” Zielinski concluded.

Fuchigami said he “didn’t really” discuss the Advan­Tech issue with Zielinski, but did meet with Advan­Tech officials Tuesday to go over their latest report.

“I am reassessing a lot of the statements that were made in the document, and I’m just waiting for the responses to come back to me,” he said.

The tax project has already stirred up controversy that involved Zielinski.

Randy Perreira, executive director of the Hawaii Government Employees Association, wrote to Gov. David Ige on Oct. 31 to object to the decision to take control of the project away from Zielinski and TSM Program Manager Robert Su earlier this year.

Ige in July named state Chief Information Officer Todd Nacapuy as “executive sponsor” of the tax project, and placed the project under the control of Nacapuy and tax department Deputy Director Damien Elefante.

Perreira said the management change “severely impacted” state oversight of the project, adding that there is a “complete lack of confidence” in the new leadership of Elefante and Nacapuy.

AdvanTech wrote in its latest report dated October that the new management team for the tax project urged AdvanTech to be more direct in describing its findings.

The consultant then went on to warn that “at present, the program is not operating in an optimal way,” adding, “There continue to be a number of issues and risks related to program execution that, if not addressed and remediated immediately, may have a significant negative impact on the program’s ability” to function properly when personal income taxes are shifted over to the new computer system next year.

AdvanTech also warned that when personal income taxes shift over, the addition of many thousands of taxpayers to the new system “could overload capacity to provide taxpayer support.”

Zielinski was named director of taxation in 2014. She previously served as state deputy comptroller, and was also accounting administrator for Maui County.

Zielinski is a certified public accountant, and previously worked as chief financial officer for the California School Employees Association labor union as well as Haleakala Ranch, Haleakala Dairy and the Federal Farm Credit Banks Funding Corp.

Star-Advertiser reporter Nanea Kalani contributed to this report.