State Tax Commission Chairman Ed Morgan told lawmakers during state budget hearings last week that his agency desperately needs $32 million to replace an imploding state tax revenue collection computer system.
The Tax Commission’s computer software system was implemented 35 years ago, in 1974. Morgan told legislative leaders last week that the tax revenue collection and processing computer software was “broken” and “on life support.”
It’s true, of course. The system is ancient, inefficient and could crash any minute.
We’re talking about a computer system crashing that collects 70 percent of the state’s General Fund revenue and processes the collection and reimbursement of over $1 billion back to local governments.
But there’s one nagging question about that dire situation over at the Tax Commission that deserves an answer before the taxpayers are called upon to cough up $32 million.
Exactly what happened to the $185 million that the state won in a lawsuit settlement on August 28, 2000, for the specific purpose of fixing the state’s old, broken tax collection computer system?
Hmmm? Legislature, where’s that money? Did somebody leave that money in their other suit? What gives? Let’s backtrack a little bit.
Over a decade ago, Mississippi filed a nearly $1 billion lawsuit against a Virginia-based software development company for not completing computerization of the state tax system years after the deadline.
State officials proved that American Management Systems Inc. (AMS), breached a Dec. 13, 1993, $12 million state contract by failing to develop STARS – the State Tax Automated Revenue System.
A Hinds County Circuit Court jury deliberated 90 minutes before delivering $474.5 million verdict against AMS. The company threatened to appeal the verdict.
But the next day, the state Tax Commission settled the lawsuit for $185 million.
STARS was supposed to enable the commission to accurately and quickly record, maintain and compute tax liabilities, payments and refunds. The commission had hoped to collect an additional $30 million to $40 million a year in revenues with the new system.
Even spread over a multi-year payout, the $185 million settlement should have more than provided funding for a total replacement of the Tax Commission’s tax collection computers and software.
So why is the head of the Tax Commission still in front of the Joint Legislative Budget Committee begging and pleading with them for $32 million in funding to replace the state’s imploding tax revenue collection computer system almost a decade after the state won $185 million for the express purpose of fixing that same old worn-out system?
Easy. The Legislature spent the money on other things.
They transferred the AMS settlement funds to the state’s General Fund and spent it on other things. It’s gone.
A million here, a million there, and pretty soon, you’’re talking about some real money – isn’t that how the saying goes? But it’s not really funny.
A decade ago, the Legislature got enough money to fix the Tax Commission’s computers five times over. But we all know the Mississippi Legislature simply can’t be trusted with one-time money.
Contact columnist Sid Salter at (601) 961-7084 or e-mail firstname.lastname@example.org.