A long-troubled California tax agency is on the chopping block.
Legislation on the governor’s desk would significantly limit the powers of the Board of Equalization, a move lawmakers described as necessary to bring transparency and fairness to taxpayers after years of scandal.
If Gov. Jerry Brown signs AB 120, the elected board would remain but be stripped of many of its duties. Two new departments would manage dozens of tax and fee programs and settle taxpayer disputes.
The proposed overhaul comes after audit revelations revealed misconduct at the BOE, including civil servants being redirected to members’ personal projects, staff intimidation and the violation of standard operating procedures.
“There should be great concern about it,” Sen. Toni Atkins, D-San Diego, said during the Senate floor debate last week. “It demonstrates to me that there’s significantly a lack of accountability that cannot go unchecked.”
State Controller Betty Yee, one of the plan’s key architects, said lawmakers had responded to the dire need to overhaul the board, citing a 2015 review by her office showing that the board had misallocated $47.8 million in sales tax revenue.
She praised lawmakers for taking “the duties of BOE down to the studs” and structurally remodeling it “to ensure more consistent, fair, transparent and efficient administration of California’s tax laws and appeals.”
Lawmakers approved the plan Thursday as part of a package of budget-related bills — a path that drew opposition, mostly from Republicans, who complained that the proposal had been rushed through the Legislature with little vetting and in a manner that could be unconstitutional.
“There are issues at the BOE that do need to be addressed, but this process that strips the power from elected officials without any kind of debate is just wrong. In fact, it’s unjust,” said Sen. Mike Morrell, R-Rancho Cucamonga.
He and other Republicans questioned whether such a reorganization could legally occur because it had not been reviewed by the Little Hoover Commission nor had it gone through legislative policy committees.
Also of concern to opponents is the proposed shift of taxpayer dispute adjudications from the BOE to a panel of three administrative law judges — a move critics fear could cause distress to individual taxpayers and small businesses called before the panel.
Democrat Cathleen Galgiani of Stockton, who broke with her party and voted against the bill, expressed concern that only the rich would be able to afford an attorney to defend themselves before these judges.
“I’m worried we’re leaving the taxpayer with even less than the equivalent of a public defender,” she said.
Taxpayers would not need to hire an attorney, supporters argued, and it would not cost them to appear before the panel.
The Senate approved the bill by a 27-11 vote, and the Assembly approved it by a 68-8 vote. It is unclear whether the governor will sign the legislation, but his own Department of Finance also has raised concerns about the troubled board.
In March, the Finance Department released a report that questioned the culture at the BOE — its inability to report accurate and reliable information, board member intervention of administrative activities, inconsistency in operations and breakdown in processes that violated state law or legislative directives.
If Brown does sign the measure, it will bring to a close more than 100 years of attempts to rein in the board.
