Editorial:  Sneaky ways around tax board campaign donation rules should be blocked

Even though most Californians probably can’t name their representative on the Board of Equalization — or any member of the board, or even that such a board exists — the races for these six-figure-salary jobs are competitive and expensive. For example, board president Jerome Horton raised more than $630,000 for his reelection campaign in 2014. That’s not unusual.

Fundraising for these races is more difficult than your typical campaign for the Legislature, however, because candidates for the board have to comply with more donation limits. Those extra strictures are designed to protect against the potentially corrupting influence of campaign cash on one of the board’s key functions: hearing appeals of decisions by other state tax authorities. This is a quasi-judicial duty, and the law says that a board member cannot vote on a case involving someone who has contributed more than $250 to his or her campaign in the past year.

It would be better to bar members from hearing any contributor’s case, however, because it’s too easy to get around the limits.

One method is to spread out donations so that they come from several people at one company. This is a trick one tax consulting firm, Ryan, employed with enthusiasm last year. Forty-five Ryan workers each gave a $249 donations ($11,205 combined) to Horton. Earlier this year, 25 of the firm’s members each gave $249 (or $6,225) to the campaign of board member George Runner.

Under current rules, if Ryan brings a case before the Board of Equalization, neither Horton nor Runner will have to recuse themselves from it.

That’s a problem, but it pales next to another way around limits: behested payments. These are donations made to nonprofit organizations at the request of a candidate. The law doesn’t set limits on these gifts, despite the fact that some of the recipient organizations have direct connections to the elected official who requested them. Horton, for example, asked SpaceX founder Elon Musk for a $7,500 gift to a nonprofit founded by Horton’s wife. Worse, the gift came just days after Horton and the board gave Musk’s company tax exemptions worth millions.

This is all perfectly legal, but it is also reprehensible. Donation loopholes stomp on the spirit of a good government law created to keep conflicts out of important tax decisions. These decisions must be based on sound policy, and we can’t be assured they are if there’s even a hint of conflict.

Ideally, we’d abolish the elected state Board of Equalization and give its duties to the Franchise Tax Board, or at least change it to an appointed body. Barring that, when the Legislature reconvenes next year it ought to close the loopholes that allow these campaign finance end runs.

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