Lawmakers to consider cutting power of California tax board

Gov. Jerry Brown and legislative leaders on Monday proposed stripping much of the power from a California board that collects nearly a third of the state's revenue following a scathing audit that found questionable uses of money and employees' time.

The Board of Equalization would lose the power to decide tax disputes and to collect most of the taxes and fees it assesses. Those functions and about 90 percent of staff would be transferred to newly created state departments led by Brown appointees.

An audit by the state Department of Finance earlier this year found that the agency misallocated tens of millions of dollars that it can't explain and made unusual moves such as using well-paid tax auditors for "parking lot duty" at a promotional event.

The five-member elected board has been a popular landing spot for term-limited lawmakers and a launching pad for elected officials looking for a platform for a run for higher office.

"What we've seen is a picture of dysfunction," Assemblyman Phil Ting, a San Francisco Democrat who leads the Assembly Budget Committee, told reporters.

Brown, Assembly Speaker Anthony Rendon and Senate President Pro Tem Kevin de Leon all support the bill, their spokesmen said.

Board members, meanwhile, blasted the proposal as an overreach by lawmakers.

"This last-minute budget power grab would strip California taxpayers of their right to bring their tax appeals before their elected peers," said George Runner, a Republican Board of Equalization member. "In its place the bill would establish yet another unelected and costly tax bureaucracy."

The board collects more than $60 billion a year. It would continue to exist but its functions would be pared back to only those enshrined in the state constitution.

Those include the power to review, equalize and adjust property tax assessments, and to assess insurance and alcohol taxes. Eliminating it would require voter approval.

Tax assessing and collecting functions would be shifted to a newly created California Department of Tax and Fee Administration. Disputes would go before administrative law judges.

The bill is expected to get votes in the Assembly and Senate on Thursday as part of the state budget. If approved, the change would take effect July 1.

"If we are to continue the board as we know it today, I think this state is incurring a huge amount of liability with respect to tax rules not being applied uniformly throughout the state," said state Controller Betty Yee, who is a member of the board and has advocated limiting its power.