BALOG COLUMN: The Department of Revenue and a $25,000 mistake

The Department of Revenue is not having a good year.

First there was this whole hacking thing.

Then we found out that the big Powerball jackpot winners were in Missouri and Arizona. There go the department's hopes for a big influx of tax revenue.

So, with no windfall to pay for the $12 million Experian credit-monitoring contract, the focus is on prevention and, of course, fault-finding.

Wednesday's Senate subcommittee hearing on the hacking was frustrating. As Stephen Largen reported, a $25,000 dual-password system could have prevented the hacking of the Revenue Department and the violation/exposure to potential identity theft of 4.2 million current and former state taxpayers.

But the state decided to stick with its fiscally conservative mindset, so our bad luck with gambling continues.

Mission creep

Yes, the department left vacant a cyber security position for over a year. Though it's unknown whether having somebody in that role instead of having the chief information officer assume those duties would have kept us from being where we are now, one thing is clear. If the department really can't attract quality applicants at the $100,000 salary it's offering, it ought to consider paying more.

Even discounting that, there is some question of whether DOR leadership was clearly focused on what it needed to do.

The department asked for a few things in its budget request this time around, including $8 million for additional auditors. That was rejected, which might sound strange at first.

After all, when Burnet Maybank became director of the Revenue Department under Gov. Mark Sanford, he requested $9 million for additional auditors and other staff, and got them. And because of that, the department collected $90 million in new revenue from people who weren't paying what they should have been on their taxes.

But you can't do that every year. Something like that is bound to have diminishing returns.

Renewed focus

“We started having all kinds of complaints of DOR stretching legislative intent,” said Sen. Larry Grooms. The Berkeley Republican, a member of the Senate Finance Committee, co-sponsored the Taxpayer Fairness Act along with then-Sen. Glenn McConnell.

The purpose of the bill was to redirect the DOR toward its primary goal of collecting and managing taxes, instead of trying to find ways to more broadly interpret the law.

“My problem with the Department of Revenue is their focus was not on protecting the data that they collect,” Grooms said. “They were picking pockets instead of protecting data.”

Whether or not you agree with Grooms' assessment of DOR's goals, it's clear that other departments had better encryption standards in place. When your online cabin reservation at Santee State Park is more secure than your Social Security number is at DOR, there's a problem.

Now, the department will wait for the subcommittee to make its recommendations.

In the meantime, the DOR can always hope for a big Powerball winner from South Carolina in 2013.

Reach Melanie Balog at 937-5565.