Editorials

Tax board desperately needs a reboot

Assemblyman Phil Ting, D-San Francisco, announces proposal to overhaul the Board of Equalization on Monday at his Capitol office.
Assemblyman Phil Ting, D-San Francisco, announces proposal to overhaul the Board of Equalization on Monday at his Capitol office.

Does anyone know what California’s Board of Equalization actually does? Most don’t. Those who do generally are also aware of the misdeeds of some of its members and the redundancy of its mission. It’s well past time for the BOE to be either reformed or abandoned.

As part of a budget deal, the Legislature seems ready to right-size the board, which was created by a state constitutional amendment in 1879 to oversee some aspects of the state’s tax collections – duties it now shares with two other agencies.

It’s not as if the board couldn’t see this coming. Following a critical Department of Finance audit, Gov. Jerry Brown blistered the board by pointing out that it “exists to serve the public and ... has fallen short.” He asked state prosecutors to look into misuse of funds charges and he suspended the board’s ability to approve contracts, make hires or promote staff.

Board members have often seemed oblivious. The four elected members – the controller is the fifth – generally are ex-legislators seeking $142,577 a year jobs that don’t require much work. Too often, they’ve found ways to skirt restrictions on the money they raise from corporate taxpayers litigating tax cases. The occasional member ends up charged with a felony; others get in trouble for assigning staff to pet political projects.

So Californians should welcome demands from Controller Betty Yee and BOE member Fiona Ma that would allow Gov. Jerry Brown and Democratic legislators to make wholesale changes, limiting the board to a few duties set forth in the Constitution. But we have a few concerns.

First, we’re not sure why details of this proposal weren’t made public sooner. Making reforms through the budget means we have only a few days to review it before the June 15 deadline for the Legislature to approve the budget, or the July 1 deadline for Brown to sign it into law. Second, we’re disappointed Republicans took no role in shaping the reforms.

California is the only state with an elected tax board. The Legislative Analyst says the board spends $27 million of its $670 million budget on constitutionally required programs, such as setting property taxes paid by PG&E and other utilities.

Audits have been pivotal in informing the public about abuses. But press attention helped force the issue. Laura Mahoney of Bloomberg has detailed how campaign donors tend to get favorable treatment. McClatchy’s Adam Ashton reported on how BOE member Jerome Horton spent $118,000 on designer furniture for his office and another $12,000 to install it.

Assemblyman Phil Ting, D-San Francisco, one of the overhaul’s architects, estimated the board would be left with about 400 employees. Roughly 4,000 other workers would be transferred to a new California Department of Tax and Fee Administration, and an Office of Tax Appeals, run by a director appointed by the governor.

Panels of tax attorneys would adjudicate tax disputes now decided by the elected Board of Equalization members. That’s an excellent idea and long overdue – just like too many BOE appeals decisions. Ting noted the BOE can take up to two and a half years to decide taxpayer appeals.

This board has been a problem for decades. But we would have preferred any changes come through the full legislative process complete with hearings rather than as an adjunct to budgeting. Legislative scrutiny tends to reveal problems. That can’t happen when bills are jammed through in mere days.

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