It all started with a question.

Why has Hawaii’s state government relegated itself to a 20th-century business model, clinging inefficiently to paper as other states dive into digital?

Sonny Bhagowalia, who has been Hawaii’s IT czar for two years, has laid out a comprehensive plan to propel the state into the 21st Century. But he said it won’t come to fruition without funding — or at least not as fast as it should.

“We’ve inherited a mess that cannot be fixed overnight,” he told Civil Beat in an interview near the end of session in May. “But the fact remains, we have a choice. Same old, same old will not cut it.”

Overhauling Hawaii’s information technology systems will cost hundreds of millions of dollars in new software and hardware, outside consultants and in-house staff. But the investment is expected to save the state big bucks in the long run and improve government services substantially.

The Legislature has tiptoed toward the initiative, which is part of Gov. Neil Abercrombie’s New Day plan to institute social and economic policies that unshackle Hawaii from the status quo.

Barely 1 percent of the $11 billion state operating budget last year went toward the digital initiative, Bhagowalia said. Best practices call for 3 percent to 5 percent, he added, and the federal government allocates roughly 10 percent.

Bhagowalia asked for an extra penny on the dollar to ramp up the effort over the next two years, which would double the current effort, but which is about half of what he believes is really necessary to modernize the way the state conducts its business. In better economic circumstances, he’d ask for more.

Lawmakers appropriated $20.3 million from the general fund for the current fiscal year, which started July 1, for Bhagowalia to run his Office of Information Management Technology. They gave him two dollars for every three that he requested. In 2015, his office is set to receive $15.1 million, less than half of what he wanted.

The Legislature did approve all $30 million in bond funding that the digital office wants for the initiative’s flagship program, an Enterprise Resource Planning system that will transform the state’s business processes. The new program will integrate 126 systems, including how the state makes purchases, pays its staff and tracks its business.

“The problem is not the payroll ladies,” Bhagowalia said. “They’re the heroes. They’ve just been going through this arcane process.”

Lawmakers may have shortchanged OIMT, but they have put millions of additional dollars toward IT specialists and programs in other departments. The Department of Taxation, for instance, will get $32 million over the next two years to modernize its core computer system.

Still, the executive budget request called for almost $60 million over the next two years to fund the broader IT initiative. The Senate agreed to fund roughly 85 percent of the request, but the House version of the budget provided hardly any money. The end result? The two chambers compromised in April with roughly $35 million in operating funds; 57 percent of the request.

David Ige, the Senate money committee chair, said this should be enough to launch some of the key components of the initiative and modernize the tax system. But he wanted more money to ensure it would be funded to completion.

The difference between the House and Senate on IT issues is evident in how each chamber conducts business. Budget negotiators from the Senate, which went paperless in 2011, showed up to hearings last session with just their laptops while their House counterparts lugged around big binders of documents.

Bhagowalia said it’s not just him asking why Hawaii won’t evolve on the IT front. He said he’s hearing it from business leaders and the public too.

“We’ve answered the question,” he said. “We just need the funding to to do it.”

His office has achieved some of the early goals in the 12-year plan to overhaul the state IT system, which was unveiled in October. The state has revamped its outdated websites, done a baseline analysis of security benchmarks and started changing the work culture.

Bhagowalia said that even if the state was flush with money for the digital overhaul, there would be no transformation without the employees changing how they do what they do. He is asking staffs to rethink how they operate instead of just doing it the same way it’s always been done.

The Tax Department is one area that’s seen improvement. Bhagowalia said his office has worked with the department to fix weak links in IT areas so taxpayers can receive their refund checks faster, for instance.

State Tax Director Frederick Pablo told lawmakers this past session that he looks forward to an updated computer system. He said the current one, developed in 1997, relies on manual processes.

Some lawmakers were eager to give Pablo’s department the funding it sought. Calling the IT department “our piggy bank,” Rep. Jo Jordan told Pablo, “you collect the dollars.”

“Receiving revenues is one of the most important things that keeps government running,” Ige said.

Other areas have received less help. Hawaii fell from a “C” grade last year to an “F” this year in transparency on government spending, according to the U.S. Public Interest Research Group Education Fund.

The report describes Hawaii as a “failing state” because it has limited basic accounting information, is hard to use, and does not include links to the state’s tax expenditure reports or provide information on the projected and achieved benefits of economic development subsidies.

The bottom line is that other states are improving faster when it comes to making spending more transparent, at least until Hawaii’s IT initiative kicks in — assuming that it has its intended effect.

“We’re 40 years behind,” Bhagowalia said. “It’s a miracle how we’re doing it. It’s a testament to employees’ professionalism, patience and perseverance.”

Bhagowalia said some have suggested he should proceed slower with the initiative, but he plans to keep pushing for more funding to make the IT overhaul a reality as soon as possible.

The next legislative session starts in January, which would be the earliest opportunity to fight for additional money to make sure that the project is more completely funded.

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