The first year of a four-year, phased-in tax compliance initiative doubled its goal, state Tax Commissioner David Langhorst told JFAC this morning. In fiscal year 2010, $1.5 million in budget stabilization funds was spent to hire 41 temporary staff in audits and collections, with a goal of collecting $10 million more in taxes that already were owed, by June 30, 2010. That would've been a return on investment of 7 to 1, Langhorst said. Instead, just over $1.4 million in expenditures has brought in $20.5 million in recoveries. "So the return on investment was not 7 to 1, but 14 to 1," he said.

In the second year, fiscal year 2011, $1.64 million in one-time general funds are being used to pay for 48 temporary staff in audit and collections, with a goal of $11.5 million in recoveries. The hires are phased in by quarter, as results are tracked. The goal: Over four years, to increase the state's annual tax collections by $67 million, capturing the "tax gap" - the amounts owed but not paid that are considered "collectible." The commission estimates the total tax gap each year at roughly $76.5 million.

Langhorst said the idea of the phase-in is to watch for "that point of diminishing returns beyond which it doesn't make sense to go," but he said at this point, "it doesn't appear we are even close to it." That may mean that the collectible tax gap is bigger than estimated, he said. "We do know for sure that this program that you helped us begin last year has succeeded in increasing revenue without raising taxes."