A spotlight has been put on the Board of Equalization, a state tax agency, that has been found wanting after a critical audit, enough so that the governor has clamped restrictions on the board. One idea that has re-surfaced in the wake of Board of Equalization examination is that the agency should be closed down. I agreed with that notion as a member of the California Constitution Revision Commission in 1996 but opposed the Commission’s final suggestion because I believe revenue officers should be elected.

The Board of Equalization is one of a number of tax collection agencies in the state. It was originally formed in the 1870s to equalize property tax assessments around the state. Four elected members plus the state controller make up the board. The total of four members was equivalent to the number to congressmen California sent to Washington in those days. While the state’s congressional delegation has grown dramatically since then, the board membership remained at it original total.

Efforts to eliminate the board have been discussed for nearly nine decades. Over the weekend, Sacramento Bee reporter Adam Ashton had a recap of many of those efforts. The issue was raised during my participation on the California  Constitutional Revision Commission created by Governor Pete Wilson and the legislature in the early 1990s. The commission made the following recommendation:

“Abolish the Board of Equalization, merge state tax administration functions, and appoint a tax appeals board. The Board of Equalization should be abolished. Its regulatory and executive functions, along with the functions of the Franchise Tax Board and other major revenue agencies should be combined into a Department of Revenue. Additionally, a state tax appeals body should be established, appointed by the governor and subject to senate confirmation.”

I supported the idea of creating a Department of Revenue, eliminating overlapping bureaucracies, and creating efficiencies by combining the state’s tax agencies.

However, I signed the Opposing View document with a number of the commission members and, in fact, submitted a stand-alone Opposing View. While there were a number of issues I disagreed with the Commission majority, the elimination of the Board of Equalization as a body of elected officials was one of them.

The dissenting document, with which I joined, addressed the creation of a single Department of Revenue this way:

“The recommendation to combine the Franchise Tax Board and the Board of Equalization into a single agency is also good, but carried off badly in an important detail. Two taxing agencies waste money, duplicate one another, and dissipate accountability. The new agency would be run by a director, appointed by the governor, which is fine. But the tax appeals board (a recommendation of the commission majority)would also be appointed by this same process, which makes it vulnerable to political pressure to get money for the state. Woe to the taxpayer who goes before this board when the governor and the legislature are scrambling to make up a deficit.”

In my stand-alone dissent to a number of the Commission’s recommendations, I wrote on the proposed merger of the Board of Equalization with the Department of Finance:

“While the merging of the functions of two agencies into one is a good plan, the new agency’s top officials must be elected…The people want direct control over officials who manage their tax dollars. By keeping these positions elective, these officers will be more responsive to the people, rather than to the person who appoints them.”

Creating a single state revenue agency is still worth considering, especially in light of the Board of Equalization’s troubles. But keep the governing officers as elected officials.