Editorial: Step 1 in killing California’s dysfunctional tax panel

In a perfect world, the state’s scandal-ridden and dysfunctional Board of Equalization — currently an elected body — would be dismantled and its duties would be reassigned to an appointed panel of tax experts.

But we live in the real, imperfect world where sweeping change is difficult to accomplish and rarely happens all at once. That’s why we support, at least as a first step, legislation that would strip the Board of Equalization of many of its duties. A new state department for taxes and fees would be created to handle administrative duties, such as collecting and allocating sales tax revenue, while tax appeal cases would be handed over to administrative law judges. Most of the board’s 4,800 staff members would be reassigned. The Board of Equalization would remain, though much diminished, with little to do other than review and adjust property tax assessments, levy insurer and alcohol excise taxes and answer the public’s questions about the state tax system.

This proposal does not go as far as we would like, but it is a move in the right direction. Once it becomes clear that there is no need to maintain an elected tax board that doesn’t do very much, it should be easier to eliminate the board altogether.

California is the only state that has an elected tax appeal board, and it has not been a source of pride. Though the board is responsible for collecting $60 billion in sales, property and other tax revenue and ruling on tax appeal cases, the four elected members (the fifth member is the state controller) are typically politicians who have been termed out of office or are waiting for the next elected seat to open up. Campaigns for the board are expensive, of course, and candidates often raise funds from donors who may have cases before them, presenting obvious conflicts of interest.

In addition, a recent report by the Department of Finance found evidence the elected board members were misusing the agency’s staff and funds to serve their own political interests, such as assigning 113 members of the board’s audit staff to parking and registration duties at a conference put on by a board member that was not focused on tax policy. The audit was not the first time board actions raised eyebrows and questions, and it prompted Gov. Jerry Brown to tighten the rules on board members and to call for reform.

And here it is, at long last. Although we support the proposal, we do have a quibble with the manner in which it was put forward. It’s been offered in the form of a budget trailer bill that was unveiled Monday and will be voted on Thursday. That doesn’t leave enough time for lawmakers or the public to digest such a major change, and we would have preferred the bill to have had a proper vetting in committee. That said, the concepts aren’t new. Reforming the Board of Equalization has been the subject of a number of hearings over the last few months, and those with objections have had ample opportunity to make their case to legislators.

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