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Taxation & Revenue requests replacement of 12‑year imaging system; LFC recommendation adopted
Summary
Taxation and Revenue presented requests to replace aging imaging software, implement electronic vehicle titles, and cover tax bill implementation costs. The committee adopted the LFC recommendation.
The committee heard the Taxation and Revenue Department (TRD) present recurring and special budget requests that prioritize staffing, pay alignment and IT system upgrades. LFC analyst Noam Montano said the executive recommendation exceeded the LFC by roughly 0.4% in general fund revenue estimates.
The department’s top C2 priority is a requested $5.6 million replacement for a 12‑year old homegrown imaging system (GenKFI) that scans incoming paper tax returns. Secretary Stephanie Chardon Clark described the risk of system failure and the benefits of an optical character recognition replacement: “We have a homegrown 12 year old software that images all of the incoming paper returns that the department receives. ... Under the current system, about 25% of our incoming returns that are paper filed end up in an error queue,” she said, explaining the backlog and manual review burden.
Other nonrecurring requests include $1.4 million for MVD electronic vehicle title issuance and electronic lien tracking and a recurring $1 million to cover ongoing costs for core tax systems. TRD also requested $5 million in special funding to implement tax and motor vehicle changes that may be required by legislation—the department uses nonrecurring “bill implementation” money when late session tax bills create administrative costs.
Montano and DFA noted the department’s funded vacancy picture: TRD reported a roughly 19.9% vacancy rate but that only a small share (about 14 funded positions, ~1.3% of authorizations) are immediately available to fill. Committee members discussed how TRD prioritizes filling positions, the automation savings expected from IT investments, and the geographic and equity implications of electronic services. Representative Garrett noted about 5% of personal income tax returns remain paper (roughly 50,000–70,000 PIT returns), underscoring the importance of reliable imaging.
Action: Vice Chair Dixon moved the committee adopt the LFC recommendation; Representative Sotanana seconded; the motion carried with no recorded opposition.
Next steps: TRD will continue to seek funding for GenKFI replacement and MVD electronic titles; committee staff and the department plan follow‑up on implementation cost estimates when tax legislation is finalized.
