The State Worker

California legislators use scalpel, not ax, on tax board’s budget

The list of strings that California lawmakers want to attach to the Board of Equalization’s 2016-17 budget.
The list of strings that California lawmakers want to attach to the Board of Equalization’s 2016-17 budget. Budget Conference Committee

Lawmakers spared California’s embattled business tax-collecting agency the deep funding cuts they had threatened a few weeks ago, but the compromise still heightens scrutiny on the Board of Equalization’s spending, trims a few jobs and demands that it plan to cut its leased-office inventory.

Gov. Jerry Brown had proposed increasing the board’s $595 million budget by about $5 million next year to hire more staffers. Senate and Assembly budget subcommittees, however, grilled agency officials after several weeks of embarrassing news in The Sacramento Bee and other media about its spending on office leases and furnishings.

The hearings went so poorly that frustrated Assembly budget subcommittee members proposed cutting the tax board’s funding more than $11 million instead of accepting Brown’s proposal. The reductions aimed to eliminate the board’s legislative staff, whack a quarter of its executive and external affairs personnel and reduce office rental costs by 25 percent. A Senate proposal was not as severe.

The board takes in and distributes more than $60 billion annually, roughly one-third of revenue that flows into the state’s bank accounts.

According to the committee’s action plan for the tax board, the compromise worked out Thursday requires:

▪ Monthly board reports on its job vacancies.

▪ Department of Finance audits to examine the board’s tax-collection operations and its outreach to taxpayers.

▪ Another Finance audit to check on what the board is doing about accounting errors that, among other things, shortchanged state programs nearly $48 million.

▪ A report by the board on how the agency will cut leased office space and use internet technology to improve efficiency.

▪ The agency plan to move board members out of Class-A Sacramento offices they lease now and back into a state-owned facility.

▪ Eliminating 11 full-time positions deemed “redundant” with a commensurate $798,000 budget cut.

In the weeks leading up to the key committee decision this week, the tax board members made moves to increase oversight on future office leases and debated how to balance their roles as the nation’s only elected tax board overseeing a nonpolitical bureaucracy. The agency also is preparing to examine a master plan for office use.