Little-Known Officials Wield Wealth of Power

They are five of the most powerful political figures in state government, after the governor, chief justice and top leaders of the Legislature.

They extract more than $33 billion a year from taxpayers, represent more constituents than most U.S. senators and trace their origins to Mexican rule of California.

Even though they are the state’s chief tax collectors, create tax rules and act as a tax court, the members of the state Board of Equalization are perhaps the most obscure elected officials in California government.

Mostly, the board plods along quietly, administering taxes and keeping itself out of the headlines.

“People don’t wake up in the morning and say, ‘I wonder what the Board of Equalization is doing today,’ ” said board member Johan Klehs of San Leandro.

Nonetheless, 25 candidates are running in the June 2 primary for four district seats on the board, positions that currently pay $98,280 a year and will increase to $123,750 in December. The fifth seat is occupied by the state controller, who is elected statewide.

Members are chosen for four-year terms from districts that contain about 8 million people each, or as Klehs likes to tell his constituents, “We represent more people than 90% of United States senators.”

Vigorous campaigns are underway in the two districts that cover most of Los Angeles County and the southernmost reaches of Southern California, including Orange and San Diego counties.

In District 4, Democrat John Chiang, a Board of Equalization staffer who replaced his boss, Brad Sherman, when Sherman left the board for Congress in 1996, is fighting for election to a full term.

Chiang is challenged by five other Democrats, including well-financed Tyrone Vahedi of Santa Monica, a senior staff auditor for the board, and Jose Fernandez, an Inglewood city councilman. Two Republicans and three minor party candidates are also in the race.

The winner of that Democratic primary is considered a shoo-in for the November general election, because voter registration in the district heavily favors Democrats (56%) over Republicans (28%).

In neighboring District 3, the race is for the seat vacated by Republican Ernest J. Dronenburg Jr. of San Diego, who is retiring after 20 years.

In this contest, Republican Claude Parrish of Rancho Palos Verdes, a business executive who has run for the post before, faces Republican Craig A. Wilson of San Diego, Dronenburg’s chief deputy.

The district is considered GOP territory, with Republican registration running 45% to 37% over Democrats. So winning the Republican nomination at the primary is usually tantamount to winning the fall run-off, political experts said.

Farther north in districts 1 and 2, incumbents Dean Andal of Stockton, a Republican, and Klehs, a Democrat, both former members of the Assembly, are seeking election to second terms. Neither has major opposition.

Those elected to the sometimes contentious board will serve as policy setters for a sprawling tax agency that administers and collects more than $33 billion a year in taxes.

These taxes cover a gamut of products and services, including revenue from the sales of gasoline, tobacco, alcohol and insurance. Other revenue sources include fees from recycling tires and motor oil.

The board also oversees county assessors, sets property tax rates for utilities, private railroad cars and timber products and enacts tax regulations that are supposed to mesh with laws passed by the Legislature.

Occasionally, lawmakers whose tax bills get killed in the Legislature try an end run by asking the board to adopt an administrative regulation that would achieve the same purpose, Klehs noted. Sometimes it works and sometimes it doesn’t.

But the board flexes one of its biggest muscles when it acts as a quasi-court and rules on the appeals of big business and wealthy taxpayers who say their tax bills are too high.

A ruling one way or the other may result in millions of dollars being sent to state coffers or remaining in the pocket of the taxpayer. Last fiscal year, the board ruled on disputes totaling $239 million.

In the District 4 campaign, it is generally too costly for candidates to purchase broadcast commercials to get their messages out in Los Angeles County. Instead, candidates are racing to get their names on slate mailers, a cost-effective campaign alternative.

Chiang, a tax attorney and former Democratic fund-raiser, says he is trying to make the board more consumer friendly by stressing “taxpayer service and community cooperation.”

His efforts have included organizing seminars for operators of small businesses and nonprofit organizations and guiding them in the proper filing of taxes, plus enlisting them in the fight against the underground economy.

His chief Democratic opponent, Vahedi, a former Republican, favors what he says should be a better focused outreach to taxpayers who genuinely don’t know how much tax they owe. He said such an effort could produce an extra $1 billion a year for state coffers.

Vahedi said his experience as a state tax auditor has convinced him that “people in California want to do their fair share. They are very honest. You need to give them the proper tools to comply.”

Another Democrat is Fernandez, the Inglewood city councilman. He said that as a board member, he would be fairer to businesses. “The complaint I hear is that the board is perceived to be oppressive by business,” he said.

On the Republican side in District 3, Wilson, the Board of Equalization staffer from San Diego, said he believes that the board can recapture some of the political clout he says it has lost to the Legislature over the years.

“Traditionally, board members come up to Sacramento, vote on 600-700 cases a year anddon’t have much more impact than that,” Wilson said. He said the board could be more influential by fully exercising all its powers.