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California's tax collection agency is 'eroding the trust of the public,' assemblyman says

An assemblyman said the state Board of Equalization "is not fulfilling its fiduciary duty." (Sacramento Convention and Visitors Bureau)
An assemblyman said the state Board of Equalization "is not fulfilling its fiduciary duty." (Sacramento Convention and Visitors Bureau)

Assemblyman Phil Ting (D-San Francisco) said Wednesday that the state’s tax collection agency, responsible for bringing in $60 billion annually, has failed to properly handle its budget money and has damaged public faith in its work.

The state Board of Equalization was recently accused of mismanagement in a review conducted by the state Department of Finance. On Wednesday, Ting, the former assessor-recorder of San Francisco, chaired a budget subcommittee hearing on the allegations.

Ting said the board and its administration could not answer “the simplest questions” from auditors about its finances and is “not fulfilling its fiduciary duty.” He added that “it is clear that [the board] is eroding the trust of the public and the taxpayers it is asked to serve.”

The Department of Finance review found employees assigned to revenue-generating jobs were reassigned temporarily to help elected board members and their political staffs with jobs that included putting on public outreach events to boost the board members’ standing in their districts.

A conference on empowering women hosted by board member Jerome Horton in his district involved borrowing 113 revenue-generating employees, including highly paid tax auditors, from the main office to help with crowd control and “parking lot duty.”

Brenda Fleming, the board’s chief deputy director, told the panel that the use of so many employees for tasks far outside their normal duties was inappropriate.

The Department of Finance evaluation found that the board “had difficulty providing complete and accurate documentation” in response to inquiries and misallocated millions of dollars in revenue, and that “various levels of management were not aware of and could not speak to” the informal establishment of a call center and creating an unofficial office location.

In response, State Controller Betty T. Yee recently called for stripping the panel of its tax administration duties and audit and compliance functions so it can focus on handling taxpayer appeals.

On Wednesday, David J. Gau, the executive director of the tax agency, said that there is room for improvement and that steps are being taken to address problems, including unspecified “abusive behavior issues.”

Under advice of his attorney, Gau declined to answer a question from Ting about whether he leaked an early copy of the review to a newspaper.

Fleming said the agency takes the findings of the Department of Finance seriously and is pursuing changes.

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