Bill Summary for Bill Number Presentation by the Department of Revenue

Date: 01/19/2006

Final
Presentation by the Department of Revenue

COMMITTEE ON JOINT FINANCE

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10:06 AM -- Presentation by the Colorado Department of Revenue

Ms. Michael Cooke, Executive Director for the Department of Revenue, distributed a packet of materials on her presentation (Attachment B). Ms. Cooke began by discussing the department's organizational structure and accomplishments. On May 2, 2005, the department completed the conversion of a new lottery computer system. The conversion enabled 2,800 retailers to use a new lottery sales system. The conversion was done overnight and sales for the month of May 2005 (during the conversion) increased over the previous month. The new system will allow consumers to purchase a greater variety of lottery products. The department saw record lottery sales for 2005, peaking around $416 million over $407 million in the previous year. During 2005, the department also broke a record for scratch ticket sales. Over $282 million was realized from scratch ticket sales.

Ms. Cooke commented on the changes that the Motor Vehicle Division made to drivers' record systems for persons who had court convictions for 2005. With the help from the Judiciary and system changes, it now takes two days or less for a drivers' record to show a court conviction. Prior to the system change, it took data entry clerks two to three weeks to post conviction information on a drivers' record. This system change is important because it allows the department to suspend a driver's privileges when necessary.

Ms. Cooke continued by briefly discussing the Colorado State Titling and Registration System (CSTARS) which will be completed this spring. This system change will greatly reduce the time it takes to train a new motor vehicle clerk to process a registration and title transaction. The system will primarily benefit county clerks or the main system users. Ms. Cooke pointed out that the greatest advantage is that citizens will be able to renew vehicle registrations on-line by the close of 2006.

Ms. Cooke continued by discussing the department's objectives for FY 2006-07. The department's first priority is acquiring a new computer system that administers the state's taxes called the Revenue Integrated Tax Architecture (RITA). Ms. Cooke pointed out several concerns. First, the department's tax system resides on a mainframe system that was initially designed in 1962. Most of the core applications on the system were written when the state overhauled the state tax system in 1964. The mainframe system includes over 800 different programs in multiple computer languages (8) that are no longer taught in computer classes. To add to the department's concerns, there are a shrinking number of IT professionals that know these languages. As an example, of the department's 15 programmers, 6 are eligible to retire within the next three years. In the future, it will become increasingly difficult to find programmers who can make changes to the state income tax system.

Ms. Cooke commented that the current system cannot be easily expanded to accommodate changes initiated by the General Assembly. To add to the concerns, the computer languages are not integrated because they have been developed separately over time and cannot communicate with each other. During FY 2004-05, the department looked at a feasibility study that evaluated the state income tax computer system. The study did not lend itself to the current system demands but offered one option that the department is considering. The option looks at using an off-the-shelf product that can be modified for Colorado's specific needs. For FY 2006-07, the department is requesting a $8.1 million appropriation from the Capital Construction Fund to replace the current system. This approach will allow the department to phase in system components as the department moves forward with the full system conversion. The total estimated cost for the conversion is $41 million. Ms. Cooke closed by saying the department would like to move forward to obtain an RFP to determine a more exact cost and time-line for the conversion.

The committee briefly discussed the level of system modification for an off-the-shelf product. Ms. Cooke commented that the system has been successfully used in other states and would be a preferred alternative to rebuilding the department's existing system from the ground up. Ms. Cooke closed by saying that going forward with a proven off-the-shelf system reduces the concern and chances for a total system failure.