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Revenue Department outlines LATAP upgrades, staffing and interagency costs in FY26 request
Summary
Department of Revenue officials told the committee the FY26 recommended budget ($134.8M) is driven by self-generated revenues and personnel needs, and that planned tax-software upgrades and hosting changes will raise near-term interagency-transfer costs but save money long term.
Abigail Chasen of the House Fiscal Division presented the Department of Revenue's FY26 recommendation of about $134.8 million, noting the budget is almost entirely self-generated fees and that the tax-collection program houses the majority of the department's 723 authorized positions.
The why: Department leaders told lawmakers the biggest near-term increases are interagency transfers, largely payments to Office of Technology Services (OTS) for core tax software, while an internal plan to move to a new software version and alternative hosting is expected to reduce hosting costs in future years.
Secretary Richard Nelson described customer-service and technology improvements underway and said the department is upgrading its tax-software stack from an older version to a newer release this year; that change increases FY26 interagency-transfer costs but should allow a future $1.5 million annual hosting savings by moving to outsourced hosting after the upgrade. Nelson also highlighted a new public website and a chatbot designed to reduce call volume and improve online access for taxpayers.
House Fiscal said the department began collecting a 1% dedication on certain tax collections in FY23 and that the department's budget relies heavily on self-generated revenues; the fiscal packet shows 51 vacancies as of Dec. 30 and that the largest vacancy counts and turnover are concentrated in tax collection operations.
Members asked about the recent statutory change that returned Office of Motor Vehicles (OMV) collections to OMV and whether that shift affected collections or operations. Department staff said the transfer of certain Office of Debt Recovery (ODR) accounts to OMV has recently completed and that the full effect is still working through accounts and operations.
Lawmakers also pressed on audit staffing. Multiple members noted tax-auditor positions are hard to fill; staff said the department will again seek civil-service classification changes and emphasized recruiting to reduce vacancies for tax-auditor and collection positions. The department confirmed taxpayers can file amended returns and other services online through the LATAP portal and that the office has negotiated lower card-payment fees for some online transactions.
The department said it is pursuing efficiencies to reduce unnecessary notices, forms and filings for taxpayers and to make the taxpayer experience more digital. Nelson told the committee the department's public Google rating has improved as part of that effort and reiterated that modernizing the tax software should reduce long-term hosting costs.
