Regardless of the rise of the digital movement, government agencies can't seem to escape piles of paper. That's what The Association for Work Process Improvement (TAWPI) and International Accounts Payable Professionals (IAPP) found after they sent a 24-question survey to about 300 state, county and municipal tax collecting agencies.

About half of the agencies responded, but the study revealed that even with all the electronic initiatives for government payment and document processes, paper remains a costly, cumbersome problem.

"Despite all this talk about e-filing, the reality is that there is nearly as much paper as ever," said Tom Bohn, CEO of IAPP-TAWPI.

He pointed out one primary culprit: In recent years, state revenue departments have been morphing into shared service centers to make better use of IT infrastructure and streamline operations. On paper, it looks like a smart move, but such collaboration comes with greater document collection. And certain processes, such as updating financial records, don't currently have an e-filing system, Bohn said. About half of the state revenue agencies use the shared services model, he said, with another 30 percent of respondents on the road to deployment. That means more paper.

Compared to electronic systems, paper-based processes can cause delays, create mistakes and clog data storage, while hiking up costs. On the flipside, e-filing brings its own baggage of security fears. But the survey found that with technologies such as imaging and data capture, government agencies have been able to control operational costs by re-engineering business processes at a time when every penny counts.

"Where they have put into place various technology, they've seen increases in cost reduction and efficiencies," Bohn said. "But various components have been consolidated and, in those areas, they have not invested as heavily as they should. There's still a ton of paper out there."

Capital Constraints

The economic recession has put a serious stranglehold on budgets, Bohn said, impacting critical investments in new technology that might make government agencies more efficient.

"There's not really anything [governments] can do about it unless they can get a large cash infusion," he said.

Drastic budget cuts or zero growth have hindered the adoption of technology across the sector. While nearly half of all survey respondents said capital budgets for payments automation projects did not change, 17.9 percent stated that their 2010 capital budgets are slightly lower compared to 2009; 28.6 percent said their capital budgets are significantly lower. According to the study, tight budgets have similarly impacted document automation projects.

"If state, county and municipal government users are going to make improvements in their payments and document processing operations in 2010, they'll likely have to do it without the benefit of additional capital," wrote Mark Brousseau, president of Brousseau & Associates, a marketing and business development firm based in central Pennsylvania. "Clearly capital continues to be very tight for government operations."

As baby boomers retire from their specialized jobs, governments will need to explore strategies to do more with less. With the influx of young workers who don't understand or accept the traditional workday concept, that means creating greater flexibility and considering partnerships beyond public-sector circles, according to Jonathan Lyon, senior manager of tax technology for the Federation of Tax Administrators, a partner in the study.

"The ability of governments to invest in such solutions will be severely constrained in the short- to mid-term; but in the long term, have no doubt, they are highly valued, as we saw in the survey results," Lyon wrote. "We'll continue to see improvements and progress in mastering costly paper-based processes in state tax administration, and this will come not only with the evolution of payment and document technologies ... but with the assistance of private providers of services that deliver the benefits of such developments."

Emerging Technology

Despite the potential

Russell Nichols  |  Staff Writer