Capitol Alert Breaking

Lawmakers aren’t done cutting the tax agency they gutted last year

Scandals make case for tax board overhaul, Phil Ting says

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.
Up Next
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.

The Legislature has one more knife to stick in the Board of Equalization, the tax-collecting agency lawmakers gutted a year ago.

This time, lawmakers could take a scalpel to the tax experts and political aides who work directly for the agency’s four elected members. Each of the BOE’s four elected offices has a dozen staff members.

The elected members of the Board of Equalization want to keep those employees on the payroll even though the agency lost the vast majority of its mandate last year. Elected board members say their staff members provide valuable services in helping taxpayers figure out how to appeal government decisions or just pay their taxes correctly.

“It’s not like people stop calling us” with questions about their taxes," said Board of Equalization member Fiona Ma.

But the Legislative Analyst’s Office counters that the BOE simply does not need a full complement of staff supporting elected officials now that it has only a small fraction of the employees and responsibilities it held a year ago. The LAO suggests in a budget report that the elected members should each have only six staff members.

Lawmakers at the Assembly Budget Subcommittee No. 4 on State Administration will consider the recommendations Tuesday when they dig into Gov. Jerry Brown’s budget request for the BOE. He’s asking for $30.5 million, a sliver of the $555 million the BOE received before the Legislature slashed its portfolio and created two new departments to take over its work.

Board of Equalization Chairman George Runner acknowledges that the agency has a smaller footprint than it did a year ago, but he plans to argue at Tuesday’s budget hearing that the staff in political offices perform an important service in helping taxpayers navigate state government.

“The reality is I have 9 million people in our district so we get tax calls on everything,” he said. "I don’t believe it’s right for me as an elected official to get a call from Fresno, and say ‘No, I don’t do that tax. I do this tax.’ ”

The BOE members are constitutional officers whose duties were created in 1879, when voters passed an initiative that charged the agency with “equalizing” property tax assessments among different counties.

Its portfolio swelled over time. Until last year, it managed more than 30 taxes and fees and collected more than $60 billion a year in revenue.

The Legislature stripped it of most of its powers after a series of audits called attention to misallocated tax revenue and a trend of state workers being pulled into assignments that appeared to promote elected officials.

The state Department of Tax and Fee Administration took over the BOE's tax-collecting responsibilities; the Office of Tax Appeals in this new forum for taxpayers to challenge their bills.

The BOE’s shrinking mandate hasn’t deterred other lawmakers from filing papers to run for its open seats. Twenty-three people are running for BOE seats on the June 2018 ballot, with at least four candidates contending for each spot.

The budget subcommittee hearing is scheduled to begin at 1:30 p.m. Tuesday in Capitol Room 447.

Welcome to the AM Alert, your morning rundown on California policy and politics. To receive it regularly, please sign up for it here.

THE BEST ELECTIONS: The White House doubled down on President Donald Trump's claim that "millions and millions of people" are voting illegally in California. Trump floated that charge, again, at a press conference last week.

Spokeswoman Sarah Huckabee Sanders on Monday reiterated that the "president feels very strongly that there was a large amount of voter fraud" in the 2016 election. She blamed the lack of evidence showing fraud on secretaries of state like California's Alex Padilla for not coughing up records for Trump's voter commission.

Padilla has been through this a few times now. He took to Twitter and CNN to swing back.

"If Trump’s conspiracy theories begin to undermine confidence in our democracy, people will begin to wonder whether or not to vote. Fortunately, every piece of evidence points to the same conclusion: that Trump’s claims are flat out false," Padilla wrote.

THE KIND OF BUDGET PROBLEM YOU WANT TO HAVE: Things are looking good in the state budget with a month to go before Gov. Jerry Brown releases his May revise. The state's revenue for the current budget year is running about $3 billion ahead of expectations with April tax returns still uncounted, according to the Legislative Analyst's Office. The LAO is promising daily updates for the rest of the week.