Gov. David Ige today named Linda Chu Takayama as the new director of the state Department of Taxation in an effort to quickly replace outgoing director Maria Zielinski in what has emerged as a pivotal position in Ige’s 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.
Zielinski abruptly resigned effective Tuesday 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, 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.
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, 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.
However, 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 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.
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.”
Takayama 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, and was also chief of staff in the office of U.S. Senate Sergeant at Arms Henry K. Giugni. She is married to state Rep. Gregg Takayama, (D, Pearl City-Waimalu-Pacific Palisades).