State Board of Equalization: Voters Lose Again


The California State Board of Equalization until today, June 27, was unique as a tax collecting and tax arbitration board whose members were elected by voters, not appointed.  The BOE was established in 1879 to ensure that property taxes were fairly assessed and collected – equalized – throughout the state of California.  Over the years, the BOE acquired the duties of collecting and administering several taxes and fees, and deciding on tax appeals.  

The Board’s longevity and its having successfully administered numerous taxes and fees affecting millions of individuals and businesses did not save it from the chopping block.  On June 15 California legislators passed Assembly Bill 102, and on June 27 Governor Jerry Brown signed the bill into law.  By the stroke of a few pens, all duties of the State Board of Equalization, except those specifically enumerated in the California Constitution, transferred to newly-created bureaucracies of unelected officials.  The California Department of Tax and Fee Administration inherited all of BOE’s tax administration duties, and the Office of Tax Appeals acquired BOE’s tax adjudication duties.  

"This agency should serve the public rather than serve the next person up the hierarchy ladder. The BOE is currently like a dysfunctional family. It needs a strong and clear leader who will assume fiscal accountability and ensure everyone plays by the same rules of good government.”  (Fiona Ma, Board of Equalization member since 2015)

The text of AB 102 lists a litany of woes, such as “inappropriate interventions by board members in administrative and appeal-related activities,” and attempts to “influence the audits, investigations, and collections activities of the board’s civil service employees.”  Leaving aside the possibility that the job of elected officials is to watch over the job of civil service employees, it appears the BOE needed some improvement.

"Taxpayers must be warned: the so-called 'Transparency and Fairness' legislation announced today by the very politicians who just voted to raise your gas tax, is neither transparent nor fair…This last-minute budget power grab would strip California taxpayers of their right to bring their tax appeals before their elected peers. In its place the bill would establish yet another unelected and costly tax bureaucracy.”  (George Runner, BOE Board member since 2011.)

With AB 102 it sounds like the baby was thrown out with the bathwater.  Voters have lost one more chance to control how they are governed.  State legislators seem to be implying that appointed officials can be held better accountable than elected ones, right after the news that appointed officials of the University of California system were found to have interfered with auditors’ surveys and hidden millions of dollars in reserves while student tuition soared.  

"Opponents to Assembly Bill 102 have stated that the bill was drafted and advanced too quickly for lawmakers to fully vet the proposal and for taxpayers to provide input.  It already has been reported that certain lawmakers believe the bill violates the California Constitution and certain state policies addressing how the legislature can make major changes to state agencies."  (KPMG Observation)

The manner in which AB 102 came into being further illustrates how voters’ rights can be eroded.  The bill passed as a trailer in Governor Brown’s 2017 – 2018 budget.  Once the budget was approved, so was AB 102.  The magnitude of changes called by this bill warranted more deliberation and public input.  The rush to passage leaves legislators and civil servants with the mammoth task of figuring the details of reassigning 4,000 employees, and administering numerous taxes and fees that generate nearly $60 billion annually.