The State Worker

$5,000 for trash cans at state office? Tax board’s furniture bill skyrockets

Tax board boss says his job was threatened

David Gau, executive director of the California Board of Equalization on April 20, 2017 told a Senate budget subcommittee that his job had been threatened, presumably by an elected official. Video courtesy of the California Senate.
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David Gau, executive director of the California Board of Equalization on April 20, 2017 told a Senate budget subcommittee that his job had been threatened, presumably by an elected official. Video courtesy of the California Senate.

A state tax agency under budget sanctions by Gov. Jerry Brown is spending $1.7 million to buy furniture and other equipment for a new office in Los Angeles County, according to documents obtained by The Sacramento Bee.

Furniture alone is expected to cost $835,000 for the new Board of Equalization office.

That’s about eight times the sum that the tax-collecting agency planned to spend on furniture in 2014 when it developed a proposal to move 160 workers and their equipment from Norwalk to a new site in Cerritos, according to documents obtained by The Bee.

“I don’t know what they’re spending money on. It’s just furniture,” said Board of Equalization member Fiona Ma.

She was alarmed by a June 1 memo from the agency’s executive director, David Gau, disclosing the probable equipment and furniture costs for the move.

Ma and her colleagues unanimously voted to approve the move in September because the state could not renegotiate a lease at the Norwalk site, and because the Board of Equalization had outgrown its original office with 160 employees working in a space designed for 120.

The board’s discussion at the public meeting showed that its members believed they were voting to move employees and equipment from one site to the other. An early draft of the proposal written in 2014 by the agency showed that it planned to spend $2.5 million moving furniture and staff.

“We’re just moving from an older building in need of serious repairs to one where we have a nice facility,” board member Diane Harkey said at the September meeting.

It is not clear whether the total cost of the move has changed because the agency refused to answer questions about its relocation of Southern California staff.

Officials from the Department of Finance and the Department of General Services, which also reviewed the moving plan at different times, could not say how the proposal had changed from one that reused existing equipment to one that relied on new materials.

The Bee requested Gau’s memo through the California Public Records Act on June 9. The agency denied The Bee’s request on June 19. It called the summary a “provisional” document that was not subject to disclosure. The Bee then obtained documents related to the move from agency employees.

Gau declined an interview request for this story. The Board of Equalization public information office also did not answer questions about the moving expenses.

Gau’s June 1 message to board members said the agency planned to reuse some furniture from the old office, but records show the agency has already spent:

▪  $162,180 on office chairs from the Prison Industries Authority.

▪  $110,000 on lobby, conference and break-room furniture.

▪  $18,498 on bulletin boards and markers.

▪  $5,020 on trash receptacles and clocks.

Brown in April placed sanctions on the agency that restricted its ability to hire workers or make purchases without his administration’s consent. The penalties followed a March audit by the Department of Finance that revealed board members had inappropriately intervened in the agency’s daily operations, allowed shaky accounting and assigned civil servants to tasks that were not relevant to the agency’s mission.

The purchases of the trash receptacles, bulletin boards and conference room furniture took place in May after Brown’s order put the Board of Equalization’s under the oversight of the Department of General Services, the branch of state government that manages real estate and bulk purchases.

The Legislature this month voted to break apart the Board of Equalization, stripping it of much of its authority and creating a new revenue department to take over much of its work. The Board of Equalization collects about $60 billion a a year in taxes and fees representing about a third of the state’s revenue. About 90 percent of its workforce is expected to move to the new department.

The Cerritos office, scheduled to open in September, would report to the new revenue department, which will be called the Department of Tax and Fee Administration.

The Board of Equalization has about two dozen offices around the state that business owners and taxpayers can visit to pay bills or meet with the agency’s staff. The Norwalk office had 22,905 visitors in 2014, a 41 percent decline from 2011.

The Legislature placed a provision in the 2016 budget that required the Board of Equalization to gain the consent of the Department of Finance and the Legislature’s joint Budget Committee before signing new leases for offices. Last year, The Bee reported that the Board of Equalization spent $130,000 to decorate the office of board member Jerome Horton.

Both the Department of Finance and the Legislature’s joint Budget Committee approved the Cerritos office. They worked from documents that said the Board of Equalization would spend about $2 million on one-time expenses for construction and security-related improvements at the new site, such as video cameras. That report does not mention new furniture.

In 2014, the Board of Equalization estimated the move would cost about $4.4 million. It anticipated spending $2.5 million for moving expenses and $1.3 million for communications equipment, according to a project summary it created with General Services.

That document shows the Board of Equalization planned to spend $102,000 on new furniture.

Ma, who is not seeking re-election next year and plans to run for state treasurer, said the swelling cost of furniture underscored the Legislature’s decision to diminish the tax agency’s responsibilities.

“That’s why the Legislature voted they way they did, which I supported,” she said. “I was shocked because that’s a lot of money for new furniture since we were told they were closing the Norwalk office and just transferring everyone to Cerritos.”

Horton at the September meeting praised the project, but called it a routine matter that did not need the board’s attention at a public meeting. He worried that discussing it in public would fuel a perception that the Board of Equalization was a poor manager of public funds.

“I just don’t want to feed into the notion that there’s something flawed in this process,” he said.

His staff did not respond to messages on Friday. The Cerritos and Norwalk offices are in his Southern California district.

The lease at the new office in Cerritos is projected to cost $112,700 a month, up from $70,200 at the Norwalk location.

The Board of Equalization’s primary Norwalk lease ends in February 2018, but the tax board is not leaving the city entirely. It has a second office for attorneys that is expected to remain open through 2020, according to the Department of Finance.

Assembly Budget Chairman Phil Ting, D-San Francisco, favors an overhaul of a tax agency called the Board of Equalization. Its recent scandals, he says, make a case for a new approach.

 

Adam Ashton: 916-321-1063, @Adam_Ashton. Sign up for state worker news alerts at sacbee.com/newsletters.

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