Betty Yee says tax board members spend public funds to promote themselves
Prompted by a series of conferences that blurred the lines between taxpayer education and political showmanship, California’s Board of Equalization on Wednesday took steps toward limiting how often its elected members can promote their work with public funds in their districts.
For the next six months, the four elected members of the board who represent geographic districts will have $800,000 to spend on so-called education and outreach programs. Previously, there was no limit on how much money could be used for mailers and events that were developed using taxpayer funds at the request of elected members.
Last year, the board spent $1.6 million on those programs.
The unanimous vote marked the second time in two months that the board adopted a good-government policy limiting public outreach directed by its elected members.
In December, the board restricted how much time employees can spend training to earn certificates that would let them file tax returns for California residents. Some elected members have made extensive use of those volunteers.
Board Member Jerome Horton, for instance, hosted 19 “mega days” in his Southern California district last year that helped residents file tax returns. They benefited from 260 public employees who volunteered at the events. Some of them were from the Board of Equalization.
“Frankly, we’ve used the program to elevate our own profiles in the district. I’ve done it. I’ve chosen not to do it after my first year because I think it’s not appropriate,” state Controller Betty Yee said at the December meeting.
Frankly, we’ve used the program to elevate our own profiles in the district. I’ve done it. I’ve chosen not to do it after my first year because I think it’s not appropriate.
State Controller Betty Yee
The Board of Equalization is under scrutiny by six outside audits, including one from the Department of Finance that is investigating whether elected members enhance their direct staffs by tapping nonpolitical public employees for pet projects.
“We are under appropriate scrutiny for these issues, and it’s appropriate for us to respond” with new policies, board member George Runner said.
Horton and board member Diane Harkey over the past several years have hosted elaborate business conferences that are partly funded and promoted by foundations tied to their families and the Board of Equalization. The foundations have received donations from companies that appear before the board, according to records kept by the Fair Political Practices Commission.
Horton last year reported $114,518 in behested payments from businesses toward nonprofit organizations. More than $81,500 went to an organization founded by his wife called California Education Solutions for income tax assistance events and a women’s conference.
Harkey last year reported $35,000 in behested payments, $25,000 of which went to a nonprofit affiliated with her for taxpayer-education workshops.
Harkey’s last “Connecting Women to Power” event featured speakers who included a former astronaut, a winning contestant from MSNBC’s “Shark Tank” and a country music singer. It also included tax workshops led by Board of Equalization employees. Participants registered at the Board of Equalization website.
Horton has drawn as many as 3,500 people to “Connecting Women to Power” events in his Los Angeles-centered district. They’ve similarly featured motivational speakers, tax workshops and “Shark Tank”-like contests. They’ve also been promoted with Board of Equalization resources.
$1.6 million Money spent by the Board of Equalization in 2016 on outreach directed by elected members
Harkey and Horton have characterized those conferences as far more efficient than typical Board of Equalization events that draw a few dozen people to learn about different taxes.
Bloomberg News in 2015 reported that the agency spent an average of $75,000 promoting and hosting five Horton events in 2014. By contrast, it spent an average of $19,282 promoting 53 other events hosted by his peers on the board. Horton’s five events attracted about 5,000 people that year compared with roughly 10,000 attendees at the 53 other events.
On Wednesday, Horton said his approach was to “enhance the product in such a way that these conferences would be more interesting” and attract more attendees.
Harkey and Horton each insisted that they do not require Board of Equalization staff members to promote and host their events. Instead, they said, they suggest an idea to a staff member and agency employees then evaluate whether an event would be appropriate.
They said they’ve been trying to direct resources in underserved communities where people want more information about tax compliance. Both said they don’t have the final say on whether an event takes place.
“I believe the process is already in place” to determine whether outreach events in districts are warranted, Horton said.
Other members of the board said those suggestions in fact represented direction to the staff. Runner and Yee said elected members should give those suggestions because they know their districts.
Runner and Yee advocated for the spending cap, characterizing it as a way to bring more transparency to outreach spending.
“If we don’t have an allocation per member and leave it up to the outreach staff, you’re all going to be directing the outreach in some way, whether it’s just identifying an area where something may be needed,” Yee said. “It puts the priority back on the staff, which I think is how we got in this debacle in the first place.”