California – Reformer’s Selective Outrage Over Board Of Equalization

The Orange County Register
by Diane Harkey
July 8, 2017

Where are the “reformers” when you need them? Blasted by what was an informal survey focused on elected members, and an actual 2015 state controller’s audit revealing not problems with the elected members, but rather with the agency that was cut loose, the Board of Equalization was gutted, two new bureaucracies created, and investigations ensued.

How did an elected board established in 1879, which launched the careers of numerous state treasurers, controllers and others statewide, suddenly become such a bad board? The truth is we were actually finally addressing some long-time, systemic problems: lack of training, ignoring policies and procedures, members exceeding boundaries of authority, and tools for oversight that were woefully inadequate, which seems to be the practice in our state.

In a report released last week, the state auditor noted that the state spent $44 billion on noncompetitive contracts worth $1 million or more between 2011 and 2016, and yet the report gets a standard nod. Perhaps reforming in this area might not be healthy for a political career in California, especially if the contracts lead to political clout or even campaign contributions.

The report noted that the Department of General Services and the Department of Technology “have missed opportunities to challenge requests for noncompetitive contracts, failed to ensure that contract databases have accurate information, and rarely disciplined other government agencies for misusing noncompetitive contracts.”

But “reformers” in Sacramento can pound their chest now that they removed elected representation from businesses and taxpayers, and placed more duties under bureaucratic control. Since assuming office in 2015, I’m proud of what we accomplished at the Board of Equalization. Unable to halt the onslaught of taxes and fees, my staff of highly skilled professional tax experts resolved over 500 individual and business tax issues in District 4, encompassing Orange, Riverside, San Diego, Imperial and parts of San Bernardino and Los Angeles counties.

We often made an immediate difference in people’s lives. We worked to release liens for apartment renters and those trying to close escrows. We helped numerous firms of all sizes qualify for tax exemptions and credits. We spotted unfair and unequal applications of tax laws and policies, and referred the cases to the agency staff responsible for resolving each issue. We updated and streamlined tax regulations through the public process, working with agency staff to ensure consensus was reached. Our office partnered with dozens of state agencies and elected officials to provide free education and outreach to constituents to help them avoid tax traps and misinformation. We provided technical assistance to help small businesses and the general public avoid expensive penalties for noncompliance with complex rules and regulations.

At monthly public board hearings, we heard numerous income, sales, and use tax appeals, and worked with the underrepresented to ensure all people, rich or poor, had a fair hearing and understood the process and the law. The Office of Tax Appeals, consisting of administrative law judges, will soon begin to hear appeals in a formal and legal setting. Duties formerly executed by the only elected tax board in the United States will be shifted to unelected state employees, eliminating an important level of recourse that the Board once provided. Good luck to those that don’t seek professional help or cannot wait or afford to appeal in an actual court of law.

Unfortunately, if you believe that people can make their own life decisions, that government should not work against you to start a business, own a home or otherwise achieve your dreams, California may not be the place for you. Promoting policies that reward honesty and individual initiative, guide new businesses, help with navigating the onerous tax and regulatory schemes, and encourage employers to use available tax credits to expand and hire more people doesn’t seem to be the plan.

Good policy should drive politics, but in California politics seems to lead reform. Blowing up a tax agency made for good press. After all, who likes taxes or the agencies that collect them? But cleaning up sweetheart deals on government contracts doesn’t have quite the same appeal — unless you are one of the businesses that lost to a noncompetitive bidder. Rest assured politicians will discuss taking corrective action, but don’t expect action or reform.

For More Information:
The Orange County Register
The SALT Report July 6, 2017
The SALT Report July 3, 2017