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Wednesday, December 29, 2010
Audit fuels “clinically psychotic” HGEA effort to strangle tax collection
By Andrew Walden @ 8:17 PM :: 15672 Views :: Health Care, Labor, Taxes

by Andrew Walden

Sometimes it is best to sit back and let them destroy each other.

Such may be the case with Hawaii State Auditor Marion Higa’s newly released audit of the Hawaii Department of Taxation.  Purporting to be an overall “Audit of Department of Taxation Contracts”, Higa’s report very quickly focuses in on its one and only target: CGI Technologies and Solutions.  

The HGEA was outraged when CGI in January, 2008 landed a $25M contract to increase Hawaii Tax collections—doing a job normally performed by HGEA members.  DOTax reported September 22, 2010 that CGI had raked in over $100M in tax revenues.  DOTax projected CGI would collect tax revenue of $120M by the end of CGI’s contract June 30, 2011.  But the HGEA was not mollified by CGI’s ability to rake in the bucks that its members need in salaries in order to pay their dues and contribute to the reelection of union-owned politicians.  Instead union operatives worked diligently to sabotage CGI’s tax collection efforts and their Legislature April 20, 2010 passed SCR 78, SD 1, of 2010 requiring Higa to perform this audit.

Higa’s auditors describe HGEA’s job action after ten months without acknowledging it a such (pg 23).  Editorial comments have been added in parenthesis to enhance clarity.  Other items have been underlined for emphasis:

Tensions between department officials reached a boiling point when a CGI manager sent a defamatory (bureaucratese for “accurate”) email on October 8, 2008 to the then-tax department director. The email described the agency as “operating in a dysfunctional management environment” and blamed the then-director for being unable to manage the situation.

The email said the then-tax director “had no management or leadership skills” and recommended that he be “taken out of the picture” as a manager of the CGI contract.  The email recommended that the then-deputy director be put in charge of the contract—a move the administration would later implement.

The email, which was derogatory to some but not all managers, was credited by one deputy director with creating a “terrible, terrible, terrible” work environment that fostered division. (Because the HGEA is unity, anything which  opposes it is ‘division’.)  The former tax director said the email characterized people in a mean‑spirited way, labeling some tax department managers in a derogatory fashion using inappropriate nicknames. Certain tax department employees who were deemed “dissidents” (ie HGEA operatives) were characterized in disparaging (bureaucratese for “accurate”) ways, including:

  • “Clinically psychotic”;
  • “Smart yet can be very air headed”;
  • “Weak leader and easily manipulated”;
  • “Not respected by his peers within the state.”

One tax department manager who was not criticized felt isolated and deemed guilty of cooperating with CGI, (So fulfilling a State contract is a crime for which one may be ‘guilty.’  Any doubt who made him feel isolated?) while another manager said statements in the email strained and altered working relationships.

Following the email, some department managers wanted to terminate the CGI contract; however, it was unclear whether the department could sever the deal without spurring a lawsuit. The Governor’s Office told the department it could cancel the contract, if it could still bring in the projected $50 million net revenue within an acceptable amount of time.  (This demand was rejected out of hand because it involved doing work.)  CGI also requested a meeting with the Governor’s Office to disengage from the contract.

From October 2008 to March 2009, tax department management essentially stopped working with CGI.  (Which was an improvement in CGI’s working conditions.) During this period managers stopped having ITIM system project–related committee meetings and CGI expressed concerns on the effect this was having on the project.

The audit then complains (p26):

the 2009 contract modification departed from the department’s procurement practices. In contrast to the 1999 and 2008 contracts, the 2009 modification did not involve the ASO, and management reviews and approvals were not evidenced throughout the process.

With CGI’s contract coming up June 30, 2011 and the Abercrombie Administration facing a $771M deficit for 2011-12, there might be a temptation to keep CGI on and rake in another $95M in net tax collections.  But HGEA wants to–what else—add positions.  Higa’s audit explains (pg3):

“…we found an internal staff that is stretched thin and frustrated (its always about their emotional state, isn’t it) with spending the majority of their time doing system testing at the expense of other responsibilities….”

But lo and behold, the Abercrombie administration is riding to the rescue.  The audit cites Abercrombie’s new appointee (pg 3): 

According to the interim director, the department has initiated corrective actions that will address some of the recommendations noted in our report. The corrective actions include the addition of a position count to the Information Technology System Office to augment short staffing, as well as training an additional ten system administrators….

Not only will the new positions result in greater operating expenses for the State, but the inevitable failure of DOTax to replicate CGI’s tax collection frenzy should cut revenues by about $27M per year. How many government union jobs will be lost or furloughed due to the bumbling HGEA leaders’ choice of targets?




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