The State Worker

California tax official got $130,000 worth of office furniture

Jerome Horton, then chairman of the California Board of Equalization, speaks during the California Hispanic Chamber of Commerce’s 18th Annual Legislative Conference on May 15, 2012.
Jerome Horton, then chairman of the California Board of Equalization, speaks during the California Hispanic Chamber of Commerce’s 18th Annual Legislative Conference on May 15, 2012. Vida en el Valle file

Last fall, more than $118,000 of designer furniture rolled into to a new downtown Sacramento high-rise office suite for Jerome Horton.

Then the chairman of the tax-collecting Board of Equalization, Horton had moved operations a few months earlier from the ninth floor of U.S. Bank Tower to its 21st floor. The new space offers a stunning view of the Statehouse and grounds out his office window, 300 feet above Capitol Mall. Some board staff privately call the office “Jerome’s aquarium” for its conference room’s floor-to-ceiling glass walls embossed with the agency’s seal.

Horton’s new furniture, some of it stashed away unused in another building as of last week, reflected the office upgrade.

According to purchase records obtained by The Sacramento Bee, more than 150 items on one invoice from Sacramento-based Miles Treaster & Associates included 24 white-leather-and-walnut chairs ($1,172 each), a matching couch ($2,267) and 21 wall-mounted cabinets with frosted-glass doors and “grooved edge top-silver undertrim” ($11,248 total). A separate invoice listed, among other items, eight satin-finish metal coat racks for $88 each and one “Blomus Symbolo Umbrella Stand (Stainless Steel, 20” tall)” for $115.

With delivery and installation of $12,000, taxpayers spent slightly more than $130,000 to outfit Horton’s office.

By contrast, three of the other four board members furnished their offices with hand-me-down surplus items produced by a program that uses cheap prison labor to produce furniture and other goods for state agencies. The fourth board member took used commercial furniture to furnish his office.

Yet it’s likely that none of it would be necessary if the board members still had offices in the agency’s 24-story headquarters at 450 N St. in downtown Sacramento.

That tower’s 22nd and 23rd floors were cleared in 2007 so that crews could repair damage caused by water that had seeped in. The cleanup forced the board to leave the building because their offices were on the 23rd floor. The building’s well-documented troubles before and after their departure include structural leaks, toxic mold, bursting pipes and corroded wastewater plumbing, faulty exterior glass panels, a bat infestation, unreliable elevators, noxious odors and trace amounts of toxic chemicals.

Taxpayers have spent roughly $60 million so far to repair the state-owned headquarters, with tens of millions more in exterior and interior fixes scheduled over the next few years.

While roughly 1,900 employees still work there, three of the four board members at the time who first moved out never went back, preferring to remain in top-flight spaces in some of Sacramento’s most prestigious high-rise office buildings. When repairs to the tower were completed, board member Michelle Steel and then-Controller John Chiang’s representative on the panel returned to the 23rd floor. The agency moved other employees into the rehabbed space.

The leases for offices for Horton and three other board members who now occupy offices outside of headquarters cost taxpayers about $740,000 per year. The state controller, who has an ex officio seat on the board, leases a small three-room office in the tower for $36,000 per year.

Jon Coupal, president of the Howard Jarvis Taxpayers Association, said that while the leases are “pocket dust” compared to the billions of dollars the state spends every year, he’s concerned that the small expenses indicate a lax attitude about public money at the highest levels of the tax board.

“They need to be cautious with taxpayer dollars,” Coupal said, “especially because they’re constitutional officers entrusted with representing the taxpayer.”

Although relatively obscure, the Board of Equalization collects about $60.5 billion annually, including retail-sales taxes, gasoline taxes and the Fire Prevention Fee assessed rural property owners protected by the state. It also hears income tax appeals brought over from the state’s Franchise Tax Board.

The five-member board has become a landing spot for termed-out lawmakers and a springboard for those aspiring to higher office. All four of the board’s current elected members, including Horton, are former state legislators. The fifth, Betty Yee, held an elected seat for two terms before voters made her state controller in 2014. That position has an ex officio seat on the board.

Former board members include Chiang, now the state treasurer, and Rep. Judy Chu.

Gov. Arnold Schwarzenegger appointed Horton to Chu’s seat in 2009. Shortly thereafter, his lease at Wells Fargo Center expired. He moved down Capitol Mall into U.S. Bank Tower’s ninth floor as a temporary space. He really wanted the unfinished 25th-floor penthouse, according to state records reviewed by The Bee.

Negotiations between the Department of General Services, which acts as state government’s real estate agent, produced a lease that would have cost taxpayers $200,000 in upgrades alone, including $40,000 for decoratively glazed glass walls.

But with the state in the throes of a budget crisis that forced deep cuts at the tax board and elsewhere, administrators quietly pushed back, negotiations bogged down and Horton’s penthouse plan died.

He remained on the tower’s ninth floor and took on a $9,900-per-month lease that expired last summer, state records show.

Leasing the larger 21st-floor area added about $7,000 per month. Documents filed by the tax board proposing the move up in October 2014 – two months before Horton was elected to a second four-year term – show that he did not expect his staff of 12 employees would grow.

The agency says that the move to the 21st floor made sense. Some legal staff had shared the ninth floor and some had worked at headquarters. Horton’s move, tax board officials have said, freed up space to consolidate those operations in U.S. Bank Tower.

Horton has refused to talk about his office space. The Bee toured other board members’ offices and found they have taken hand-me-down desks from the state’s existing inventory, asked employees to purchase office chairs from a charitable organization and even brought in furniture from home.

And Horton’s staff worked in their new office space for nearly two months using the furniture brought up from the ninth floor. After The Bee made inquiries about board members’ spending at the end of February, Horton asked a project manager to return at least some of the old furniture, according to a memo his office gave to The Bee.

“As the furniture in my office was not placed until a few months after the move in,” the March 1 memo signed by Horton states, “I would like to request that you return (sic) the reception furniture and lounge furniture in my office with my original furniture.”

Vince Paul, the tax board’s acting chief of administrative services, politely said no two weeks later.

The furniture “was a sound investment and purchased in accordance with the furniture costs for executive offices throughout the Board of Equalization,” Paul stated in a March 16 response memo. Horton’s old furniture had already been snapped up for use elsewhere.

Used and discounted furniture dominates other offices leased by tax board members who say that they have scrimped to save money even though they inhabit some of Sacramento’s most expensive spaces.

For Chairwoman Fiona Ma’s K Street offices, employees bought a discounted refrigerator from a retailer’s dinged stock and brought in a break room table from home. Diane Harkey’s Wells Fargo Tower office is stocked with furniture inherited from her predecessor on the board or claimed from the state’s used-furniture inventory.

George Runner’s desks are not made by state prison inmates, the standard equipment for most state offices, but he saved money by negotiating to take furniture from other parts of Bank of the West Tower when he moved into it five years ago. Runner also has a larger office than his board colleagues, he said during a recent interview, because Sacramento is in his district and therefore serves local taxpayers.

State law requires departments that purchase new office furniture to do so from the Prison Industry Authority, which among other things trains inmates in carpentry.

Records reviewed by The Bee, however, show that a tax board project manager asked for a $250,000 waiver to buy Horton’s office furniture from another source. The reasons, according to the documents, were that Horton needed the furniture sooner than the inmate program could produce it and that prison authority stock wouldn’t match unspecified “existing finishes” in the new space.

The authority granted the request on June 24, 2015, with a note: “We would be very interested to know why the alternate product was chosen.”

Horton’s chief of staff, Kari Hammond, could not explain how the furniture purchase served taxpayers or who was responsible for it. She implied that staff at the board’s headquarters made the decision, but she declined to be specific. Hammond also suggested that Horton would not call out who was responsible.

“He is very protective of the agency,” Hammond said.

Asked whether Horton was helpless to stop or amend any purchase that bureaucrats designated for his office, Hammond said, “I wouldn’t say that.”

In fact, the board’s administration department, which handles purchases, takes its direction from board members, agency spokeswoman Venus Stromberg said in an email.

“The Board Members’ offices work with BOE’s Administrative Services Staff to request contracts and procure services,” she wrote, and the head of the unit answers to a manager who in turn is appointed by the board.

Meanwhile, some of the furniture purchased for Horton’s office suite has not been used. Photos obtained by The Bee and confirmed by tax board staff indicate that at least six white chairs were stashed in a storage area on the top floor of the agency’s 450 N St. headquarters building. Asked why nearly $5,000 in new furniture was locked away with cubicle dividers, dissembled metal shelving and used inmate-constructed desks on the 24th floor, BOE spokeswomen Yating Campbell and Stromberg said they did not know.

Horton may, but he has refused to discuss the matter. After several interview requests via surrogates and emails were either ignored or put off, The Bee approached the former Democratic assemblyman at a Rancho Cordova awards ceremony on Tuesday to ask questions about his office furnishings.

“I’m declining to comment,” Horton said.