The Board of Equalization’s former duties have largely been transferred to the Department of Tax and Fee Administration and the Office of Tax Appeal.
Stephen Lam/S.F. Chronicle
If you have no idea what the California State Board of Equalization is or what it does, you’re not alone.
The obscure agency, made up of four elected officials and the state controller, is the only elected tax board in the country. It was created by constitutional amendment in 1879 to limit corruption among county assessors and ensure property taxes were assessed uniformly and fairly across the state. At its peak, it oversaw the collection of one-third of all taxes across California and employed a staff of thousands.
But in 2017, then-Gov. Jerry Brown and the Legislature stripped the board of most of its duties and transferred them to the newly created Department of Tax and Fee Administration and the Office of Tax Appeal.
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Why? Because corruption at the Board of Equalization had become too blatant to ignore.
The Chronicle editorial board has begun rolling out its endorsements for California’s June primary election. In the weeks to come, we will publish our assessments of all the state races, including the governor’s race, plus local races and ballot measures. To read more about how the editorial board makes its election endorsements, go here.
Plus: Look out for the Chronicle’s Voter Guide to publish in early May, as ballots get mailed out across the Bay Area.
In 2010, a Bureau of National Affairs report examined 70 complex Board of Equalization cases and found that taxpayers were more likely to win if they or their representatives made campaign contributions to board members. A 2015 state controller’s audit found that the board had misallocated nearly $50 million in retail sales tax revenue. In 2017, another investigation found that a whopping 17.5% of board employees were related by blood or marriage, and a state Department of Finance audit found that board members were improperly intervening in agency operations, including by unlawfully redirecting staff to work on pet projects.
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The board is now a shadow of its former self. It nominally oversees the 58 county tax assessors and handles certain taxpayer appeals, assesses and collects the alcoholic beverage tax, administers the tax on insurers, assesses the property of regulated railroads and certain public utilities, and assesses and collects the private railroad car tax.
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It’s also required by statute to hold one (yes, just one) monthly public meeting.
But the board has little reason to exist, as we have repeatedly argued.
Yes, it has been given modest new responsibilities in recent years, such as implementing aspects of Proposition 19, the 2020 ballot measure that curtailed the tax break for parents passing homes to their children. But there’s no reason the state’s professional tax boards can’t handle those duties.
At this point, the whittled-down agency is little more than a cushy political jobs program — with a commensurately cushy salary. A Board of Equalization member earns $184,447 annually — the same as California’s lieutenant governor and secretary of state.
So, given these realities, what are voters supposed to do about the six candidates running in the June primary election for the board’s District 2 seat, which encompasses the Bay Area and stretches from the Oregon border to Ventura County?
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This editorial board isn’t going to officially endorse a candidate for a role we don’t believe should exist. But we interviewed the contenders and will give you our candid thoughts.
Incumbent Sally Lieber, a Democrat and former state Assembly member, is smart, well-spoken and passionate about helping taxpayers navigate the tax appeals process. She’s used the board’s limited authority effectively, as when she called for a hearing last year to probe potential solutions to the issue of widespread underinsurance among California homeowners. In her endorsement interview with us, she proposed using the board’s power to tweak Prop 19 implementation to give taxpayers more time to file complex paperwork — an idea we support.
Yet Lieber’s almost blind fealty to the Board of Equalization’s continued existence is frustrating.
“Because we are an elected board, (taxpayers) feel like there’s an actual human there to listen to them. I don’t actually try to solve their tax problems, but I make connections to our very able professional staff,” she told us.
Yet this philosophy — that access leads to improved service — is exactly what enabled the board’s corruption in the first place.
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Lieber also argued that eliminating the Board of Equalization would cost “tens of millions of dollars a year,” citing the legislative analysis of a 2023 bill that proposed eradicating the agency. Yet that analysis stated that removing the board “would not impact state revenues” and would in fact save taxpayers at least $672,060 annually. (In an email, Lieber acknowledged her mistake, writing, “I don’t know how I could have been so far off in my recollection!”)
Meanwhile, John Zaruka, a Republican retired hospitality executive, told us that he would push for the board to reassume its sales tax responsibilities — but if that didn’t happen, “You question why it even exists and why you would get paid that kind of money.” We were impressed by his pledge to donate his salary to food banks if elected. But Zaruka acknowledged that he’s a “novice candidate” who’s still learning about the board’s intricacies.
John Pimentel, a Democratic elected trustee of the San Mateo County Community College District and renewable energy executive, is no novice. He’s open to dissolving the board and has the political sophistication to make such a case to the Legislature and to voters.
As California’s deputy secretary of transportation in the 1990s, he was involved in efforts to merge the California State Police with the California Highway Patrol, which an independent analysis found would improve security and save taxpayer funds. We also think Pimentel could help foster accountability and transparency at the board: He and other trustees of the San Mateo County Community College District investigated the chancellor emeritus for unethical conduct and voted to fire him; in January, the former chancellor was convicted of felony tax evasion and perjury. Pimentel also has legislative bona fides; he was a main proponent of a 2022 bill signed into law by Gov. Gavin Newsom that allows San Mateo County residents to attend community college for free.
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With his combination of deep experience and willingness to push for needed reforms, Pimentel is the best candidate in the race.
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Also running are Republicans Bill Shireman, a taxpayer advocate who said he wanted to leverage the board’s “soft power” to advocate for systemic tax reform; Mark McComas, a former U.S. Small Business Administration employee who repeatedly railed against “waste, fraud and abuse” without offering specific plans to combat it; and small-business owner J Brett Marymee, who declined our interview request.
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