Dan Walters

Tax board’s hijinks make case for giving it the boot

The state Board of Equalization is a powerful state agency that few Californians even know exists – unless they’ve been paying attention to its unseemly hijinks.

Many have involved Jerome Horton, who represents the Los Angeles area on the five-member board and was its long-serving chairman until his colleagues decided that enough was enough.

His most spectacular misstep involved a $130,000 redo for his lavish office in a downtown Sacramento high-rise, including two dozen white-leather chairs that cost $1,172 each.

At first, when The Sacramento Bee revealed the pricey makeover, Horton incredibly denied any involvement, saying it was done without his knowledge by the board’s bureaucrats, then later acknowledged, after “looking more deeply into the matter,” that he and his aides were involved.

Actor Rob Lowe, who waged a lengthy battle before the board on an income tax issue, alleged that Horton uttered a slur about Jewish people while meeting with Lowe and his wife, who is Jewish.

However, there’s more to the Board of Equalization saga than Horton.

The Bee also revealed last year that he and other board members secretly fired the agency’s executive director, who immediately joined Horton’s personal staff, after State Controller Betty Yee, who sits on the board herself, released an audit declaring that the board staff had misallocated tens of millions of dollars.

More recently, the board imposed limits on how much public money its members can spend on “education and outreach” events in their districts that were little more than exercises in political aggrandizement. Horton, not surprisingly, was the No. 1 sponsor of such events. And The Bee revealed a series of mysterious staff salary increases.

Originally established in 1879 to ensure “equalization” in how counties assessed property for taxes, the board incrementally acquired additional duties, including the administration of sales and fuel taxes and hearing appeals of income tax cases, such as Lowe’s.

Four of its members are elected from immense districts, each with about 10 million residents, and the fifth is the state controller. Almost always, including now, its elected members are former state legislators who look upon it as either a well-paying sinecure or a stepping stone to higher office.

Its members, therefore, have political mindsets, rather than those of professional tax officials, and outcomes of cases often reflect that attitude, which means they are often erratic and inconsistent.

Occasionally, the board makes some token reforms after being embarrassed by audits or newspaper revelations, but then inevitably returns to its bad old ways.

Real reform would be to abolish the board entirely and fold it and the three-member Franchise Tax Board, which oversees income taxes, into a Department of Revenue staffed by professionals and overseen by a director who is appointed by and accountable to the governor, with a tax court to handle appeals.

However, the Legislature is not likely to take that step, because it would mean abolishing offices that legislators themselves yearn to fill.