GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1991

H	1 

HOUSE BILL 1252

Short Title:  Tax Automation Funds.	(Public)
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Sponsors: Representatives Miller; and Bowman.
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Referred to:  Appropriations.
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May 10, 1991

A BILL TO BE ENTITLED
AN ACT TO APPROPRIATE FUNDS TO THE DEPARTMENT OF REVENUE TO CONTINUE AUTOMATION OF ITS INTEGRATED TAX ADMINISTRATION SYSTEM AND TO REQUIRE THE STATE TREASURER TO STUDY THE BENEFITS OF USING ELECTRONIC FUNDS TRANSFER FOR RECEIPT OF PAYMENTS TO OTHER STATE AGENCIES.
Whereas, in 1987 the General Assembly appropriated funds for the acquisition and installation of a Department of Revenue office automation system which is now operational; and 
Whereas, the main systems applications presently in use by the Department of Revenue were developed in the early 1960s and are currently running on outdated hardware, and vendor support and maintenance for both software and hardware will soon be discontinued; and 
Whereas, the next phase in Department of Revenue automation may be accelerated by as much as three years by the acquisition of a modern mainframe and installation of an existing integrated tax administration system; and 
Whereas, the benefits to the State from the completion of the Department of Revenue's automation plan include not only increased efficiency but the generation of at least an additional forty million dollars ($40,000,000) of revenue in the first full year of operation; Now, therefore, 
The General Assembly of North Carolina enacts:
Section 1.  There is appropriated from the General Fund to the Department of Revenue the sum of $5,700,000 for the 1991-92 fiscal year and the sum of $7,250,000 for the 1992-93 fiscal year to be used for the development and operation of an automation plan to enhance its integrated tax administration system.
Sec. 2.  The Department of Revenue shall expend funds for the automation plan which shall be restricted to the acquisition of necessary equipment and software, securing the services of third-party vendors, and necessary operating personnel according to the following procedures and limitations:
(1)	The Department of Revenue shall report to the Information Technology Commission created in G.S. 143B-426.21 on the proposed implementation and anticipated effectiveness of the automation plan in such detail as will be sufficient to illustrate the cost of various components of the plan and to demonstrate that additional revenue collections will exceed the annual costs of the automation.
(2)	Before continuing the automation plan beyond the first fiscal year for which appropriations are made, the Department of Revenue shall report its conclusions about the continuation or termination of all or any part of the automation plan to the Joint Legislative Commission on Governmental Operations.
(3)	The Department of Revenue may purchase or finance the purchase of property by installment contracts that create in the property purchased a security interest to secure payment of the purchase price to the seller or to an individual or entity advancing moneys or supplying financing for the purchase transaction.  No contract entered into under this subdivision may contain a nonsubstitution clause that restricts the right of the State to (i) continue to provide a service or activity or (ii) replace or provide a substitute for any fixture, improvement, project, or property, or property financed or purchased pursuant to the contract.  No deficiency judgment may be rendered against the State in any action for breach of a contractual obligation authorized by this subdivision and the taxing power of the State may not be pledged directly or indirectly to secure any money due under a contract authorized by this subdivision.
(4)	The Secretary of Revenue shall consult with the State Treasurer before approving any arrangements entered into with third-party vendors which involve the remittance of funds by electronic funds transfer, so that the needs and concerns of both agencies may be considered and addressed.
Sec. 3.  The Department of State Treasurer shall study the feasibility of providing for receipt through electronic funds transfer of payments to State agencies.  The Department of State Treasurer shall determine the potential gain on investment earnings on these payments due to the reduced time lag currently caused by delivery of payments through the United States mail and by hand-processing of checks.  The Department shall also investigate the administrative costs or savings that would result from adopting electronic funds transfer procedures for the State agencies that receive payments.  The State Treasurer shall report the results of this study to the Speaker of the House of Representatives and the President Pro Tempore of the Senate on or before the first day of the 1992 Session of the 1991 General Assembly.
Sec. 4.  This act becomes effective July 1, 1991.