Capitol Alert

This board used to collect billions in California taxes. Voters might get to kill it.

Betty Yee says tax board members spend public funds to promote themselves

State Controller Betty Yee, at a Dec. 14, 2016 Board of Equalization meeting, said elected tax board members are using public employees to promote themselves in their districts.
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State Controller Betty Yee, at a Dec. 14, 2016 Board of Equalization meeting, said elected tax board members are using public employees to promote themselves in their districts.

A California tax agency that used to collect tens of billions of dollars a year could be snuffed out for good if the Legislature moves forward with a pair of bills that would kill what’s left of the Board of Equalization.

Assemblyman Adrin Nazarian, D-Sherman Oaks, wrote the bills that would finish an effort the Legislature began two years ago when it stripped the Board of Equalization of almost all of its power, budget and staff.

Back then, the Board of Equalization had more than 4,200 employees and handled about $60 billion a year in taxes and fees. It was the only elected board in the country that both set tax collection policies and weighed appeals from taxpayers. Its core duties were written into the state constitution.

Its once-expansive authority now mostly rests in two separate departments, neither of which is governed by elected politicians. The California Department of Tax and Fee Administration collects dozens of taxes and fees, while the Office of Tax Appeals weighs complaints.

Now, Nazarian and other Democratic leaders say it’s time to ask voters to get rid of the elected tax board.

“A very high percentage of their duties have now been taken away. I don’t see the point of keeping the institution around,” Nazarian said.

The Board of Equalization still exists, but with fewer than 200 employees and an elected board that primarily handles disputes that vexed California government in the late 19th century, when state voters passed an initiative calling for an agency to “equalize” property tax assessments among different counties.

That’s the part of the agency that the Legislature could not eliminate two years ago without putting an amendment on the ballot. They voted to gut it after a series of audits concluded it had misplaced revenue, allowed nepotistic hiring and permitted elected board members to misuse state resources for events that appeared to be political in nature.

Nazarian has support from State Controller Betty Yee, who was first elected to the Board of Equalization in 2006 and has continued serving on the tax board since she was elected to statewide office.

Yee had called for significant changes at the Board of Equalization for years. A 2015 audit her office conducted that showed the Board of Equalization had misallocated $47 million in retail sales tax revenue became one of the key reports that persuaded the Legislature to limit the agency’s power.

“California is the only state with an elected tax commission, and with its much scaled-down duties, it is time to abolish the BOE and assign its remaining duties to an existing state tax agency,“ she said.

The Senate Government and Finance Committee on March 6 is expected to hold an oversight hearing on the Board of Equalization. It’s also planning hearings on the tax departments the Legislature created to replace the agency.

Nazarian’s bills are Assembly Constitutional Amendment 2, which would put a measure on the ballot abolishing the Board of Equalization, and Assembly Bill 576, which signals the Legislature intent to eliminate the board if voters choose to do so.

The Board of Equalization has defenders among taxpayers and advocates who liked the idea of being able to take their concerns to elected representatives. They felt elected representatives were more responsive to questions and appeals than state tax collectors.

Aside from Yee, who sits on the board in her role as controller, the agency has four elected representatives from geographic districts. All four of the district representatives are new to the board.

The board still is involved with railroad, telecommunications and property taxes. It also holds public hearings for taxpayers to raise general questions about tax policies.

“We have to start with just doing our basic duties we’ve been given,” said Board of Equalization member Ted Gaines, a Republican and a former state senator. “We want to make the case and I’m working toward letting legislators know to give us a chance, give us a chance to prove ourselves.”

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Adam Ashton is The Bee’s Capitol Bureau Chief. He leads a team of reporters covering California politics and government. His assignments for The Bee and its sister papers have taken him from Merced to Baghdad since joining McClatchy in 2004.


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