Betty Yee says tax board members spend public funds to promote themselves
The executive director of a troubled tax board told a Senate hearing Thursday that the agency is “at a tipping point” and acknowledged that he has been threatened with his dismissal.
David Gau stopped short of saying that a specific elected member of the Board of Equalization threatened him. He reports to five elected officials.
“I presently have been subject to that threat recently,” he said at a budget subcommittee led by Sen. Richard Roth, D-Riverside.
Gau disclosed his status with the board when Roth asked about employees who told auditors that they feared retaliation from elected board members.
In one instance, an employee was told by an unnamed official, “one more vote and you’re gone,” according to the audit.
“There is undeniable pressure in working for five board members,” Gau said. “In my case recently I was threatened.”
Gau has worked for the Board of Equalization for 36 years. He was appointed as executive director a year ago after the board removed his predecessor, Cynthia Bridges.
Roth’s committee called Gau and two other executives to answer questions about an audit that suggested the Board of Equalization had allowed elected members to “redirect” civil servants to political pet projects, including expensive promotional events that have a “limited nexus” to the agency’s responsibility to collect taxes.
The audit prompted two of the board’s members – Fiona Ma and State Controller Betty Yee – to call for an overhaul of the agency. It led Gov. Jerry Brown last week to sanction the agency with spending constraints and request another investigation by the Department of Justice.
Roth, a former Air Force general, focused many of his questions on the audit’s suggestion that board members had sidestepped the agency’s formal chain of command to make decisions without telling executives like Gau.
For instance, the report described two offices that opened in board member Jerome Horton’s Los Angeles-based district without formal votes at public meetings. Auditors could not determine how the offices were opened.
In one of the offices, auditors met employees who on paper reported to executives but in practice worked for Horton’s staff.
In other cases, board members pulled civil servants to different positions without notifying executives. Gau acknowledged that the agency in the past had not tracked temporary postings for civil servants in political offices and had allowed some promotional events to grow without oversight.
“I do see a breakdown at all levels here,” said Sen. Steven Glazer, D-Orinda.
Gau earlier this month declined to answer questions about the audit at an Assembly budget committee hearing, citing potential litigation.
This time he answered questions throughout the three-hour hearing. After the meeting, he declined to identify who threatened his job.
When asked why he spoke openly at this hearing and not the previous one, he said, “timing.”
The board met in closed session on Monday to discuss lawsuits and leadership changes. It did not announce actions. Gau at the Senate hearing said a majority of the board had committed to keeping him in his position.
He told Roth he’s working to improve the agency’s governance structure by developing policies that better define the roles of elected members and civil servants. Next week, the board is expected to consider new limits on large-scale promotional events that were criticized in the recent audit.
“We’re in crisis mode,” he said. “I feel I’m in a good position, and I feel a responsibility to come to you and speak up,” he said.