State Labor Department head to lead tax office

Gov. David Ige on Wednesday named longtime government executive Linda Chu Takayama as the new director of the state Department of Taxation, quickly replacing outgoing director Maria Zielinski in a key position in his administration.

Takayama is a lawyer who now serves as Ige’s director of the state Department of Labor and Industrial Relations, and previously served as state insurance commissioner. Her appointment is effective Monday.

Zielinski abruptly resigned in the wake of a report that revealed state tax officials instructed a supposedly independent consultant on which subjects it should address 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.

AdvanTech is an “independent verification and validation” consultant hired under a $1.43 million contract to help 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 TSM contractor promised it would.

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

Zielinski said Wednesday that her resignation “has absolutely nothing to do with the independent validation and verification report done by AdvanTech.”

“I can unequivocally state that to my knowledge, no facts or findings were manipulated in any way,” Zie­linski said. “Anyone familiar with IV&V and audit reports knows that there is always an exchange of comments and dialogue between the client and the consultant/auditor. Ultimately, the independent consultant/ auditor who prepared the report owns it and stands by it.”

Zielinski declined to say why she abruptly submitted her resignation on Monday, the day before it became effective. Ige told reporters that Zielinski’s resignation “was not directly related to the TSM project.”

Takayama will earn $144,552 a year in her new job. She previously served as director of economic development in 2014 and 2015 for Honolulu under Mayor Kirk Caldwell, and was deputy director of the state Department of Commerce and Consumer Affairs under former Gov. Ben Cayetano.

She was also Hawaii insurance commissioner from 1991 to 1994 under former Gov. John Waihee. She is married to state Rep. Gregg Takayama, (D, Pearl City-­Waimalu-Pacific Palisades).

Ige is under intense pressure to efficiently execute the $60 million contract to replace the tax department’s old computer system. State government has had an embarrassing history of botched computer projects dating back to previous administrations, and the computer system for collecting state taxes is a critical piece of state infrastructure.

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

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

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

However, AdvanTech wrote in its latest report dated October that the new management team urged AdvanTech to be more direct in describing its findings. The consultant then went on to express concern about the progress of the project, warning that “at present, the program is not operating in an optimal way.”

“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,” the consultant wrote.