16 Are Seeking 4 Coveted Posts on Tax Board

Collecting the money that runs California government sometimes comes down to questions like these:

Are oak barrels used to make wine exempt from property tax because they impart flavor? Can satellites made in El Segundo be taxed each year as they orbit above the equator? Do airport restaurants deserve a tax break because they lost business after the Sept. 11 terrorist attacks?

The California Board of Equalization decides such matters. It reaches 1 million businesses, from hot dog stands to giant telecommunications companies. Last year, the board collected $39.5 billion in taxes and fees that state and local governments use to pay for schools, parks, roads, health care, police, housing and more.

The Board of Equalization is the nation’s only elected tax commission. Its four $131,250-a-year positions--a fifth seat is held by the state controller--are coveted by legislators ousted by term limits. At the same time, the board is a jumping-off spot for politicians seeking statewide office.

In the March 5 primary, 16 candidates compete for four seats. They include two veteran lawmakers. Two of the seats opened when current board members, Democrat Johan Klehs and Republican Dean Andal, chose to run for state controller.

In the board’s 1st District, Assemblywoman Carole Migden (D-San Francisco) runs unopposed in the Democratic primary. Having served the maximum six years in the Assembly, she would become California’s first openly gay constitutional officer if she wins the heavily Democratic Northern California coastal district in November. Two Republicans and a Libertarian candidate are on the primary ballot.

Seeking to represent the Board of Equalization’s 2nd District after 24 years in the Legislature is Republican Assemblyman Bill Leonard. In the once-a-decade redrawing of political districts that occurred last year, Leonard’s colleagues in the Legislature stretched a finger of the 2nd District to reach Leonard’s San Bernardino house.

In the Republican-leaning 3rd District, incumbent Republican Claude Parrish faces two primary challengers, including Steve Petruzzo, a veteran auditor for the board who proposes making the trade-in of used cars tax-free.

The relatively small 4th District encompasses the southern half of Los Angeles County. Incumbent John Chiang, a Democrat who organizes public workshops to help taxpayers, faces no competition in the primary. The sole Republican candidate, businessman Glen R. Forsch, said he would push to make a day or more of each month a “sales tax holiday” if he were elected. The Libertarian candidate, attorney Kenneth A. Weissman, said he wants to see state government--including taxation--”scaled back tremendously.”

A constitutional amendment created the board 123 years ago to make certain that county assessors levied property taxes uniformly. It was also given the duty of taxing politically powerful railroads and utilities.

Today, the Board of Equalization’s 4,000 employees handle the state’s sales tax and collect fuel, alcohol and tobacco taxes. The board itself acts as judge in property tax and personal income tax appeals. Its interpretation of tax law can mean the difference between tens of millions of dollars paid in taxes or retained by big corporations.

Though each Board of Equalization district is vast, encompassing roughly 8.4 million people, the post is too obscure to justify expensive television advertising. Most candidates, if they campaign at all, use signs and mailers.

Most candidates for the March 5 primary have raised little or no money, with several notable exceptions. By January, Migden had gathered more than $500,000. Parrish had raised more than $250,000. Leonard and Chiang had each amassed nearly $200,000.

Some of the donations came from companies whose property is assessed by the board. Southern California Edison executives donated $5,000 to Leonard, for example. Pacific Bell/Pacific Telesis employees gave $5,000 to Parrish.

But many companies limit their donations to $249.

That’s because Board of Equalization members must follow tougher conflict-of-interest laws than lawmakers. A 1990 law requires board members to either recuse themselves or return donations before voting on matters that involve companies that have given them $250 or more in the past year.

There’s a loophole. Many big corporations with business before the board--including Burlington Northern and Santa Fe Railway, Duke Energy and Sprint--give money to the Taxpayers Political Action Committee, which then funnels donations to board members without being hindered by the $250 limit.

In January, TaxPAC donated $15,000 each to Leonard, Parrish and Chiang, then gave Leonard another $10,000 last week.

State Senate Leader John Burton (D-San Francisco) tried last fall to close that loophole and make political action committee donations subject to the same restrictions as direct donations. But Migden, the Board of Equalization candidate who chairs the Assembly Appropriations Committee, stripped the provision from Burton’s bill. Migden said she recalls Burton’s bill being amended to comply with rules affecting other constitutional offices.

Asked what they hope to accomplish on the Board of Equalization, candidates offered ideas that ranged from opening more district offices to obliterating the agency.

Leonard, the Republican Assemblyman running in the 2nd District, proposes a constitutional amendment that would consolidate California’s tax agencies into a single California Tax Commission. He would combine the Board of Equalization, the Franchise Tax Board, which collects income tax, and the payroll-tax division of the Employment Development Department.

Such a consolidation would spare business owners from filling out triple sets of paperwork and limit the circulation of confidential tax data, Leonard said.

His Republican opponent in the primary, anti-tax crusader Edward J. “Ted” Costa, said “political maneuvering” at the board must be stopped.

Costa, director of People’s Advocate, a Sacramento-based group that lobbies for lower taxes, also criticized the Legislature for redrawing districts to suit Leonard and Migden. “What’s the use to elect people to the Board of Equalization,” Costa said. “Let’s just say the Board of Equalization seats are a plum we’re going to give to retired legislators.”

Leonard, who has been in the Legislature since 1978, said he did not draw the new lines, but “I did sit down with the Democrats and said I want a district to run in.”

The Democrats competing for the 2nd District are Norman R. Angelo, a recently retired board auditor from Bakersfield, and Tom Y. Santos, a Sacramento tax consultant. Angelo said he would like to reopen some of the 17 district offices closed by Andal to save money. “The board should be more accessible to the businessman,” Angelo said.

Santos, also a former board auditor, agreed that small offices should be reopened to give business owners personal help. And taxpayers deserve more equitable treatment when they bring tax disputes to the board, he said. “I would be a good voice for tax simplification and tax fairness,” Santos said.

In the 3rd District, which covers parts of San Bernardino, Riverside, Orange, San Diego and Imperial counties, two Republicans hope to unseat incumbent Parrish.

A former real estate director with ABC, Parrish consistently sides with taxpayers, not staff, in his votes. He said he may run for state treasurer someday, and he prides himself on directly helping taxpayers. “I call everybody back personally,” he said. “I am accessible.”

Petruzzo, a board auditor for 17 years, said he wouldn’t be running if Parrish were “a productive board member.” He said the board must do more to help businesses navigate tax law, perhaps by offering voluntary annual audits so that businesses do not unwittingly violate the law for years at a time.

Parrish’ other challenger in the primary, Emad Bakeer of El Cajon, did not respond to requests for an interview.

The only 3rd District Democratic candidate is Mary Christian-Heising. Once employed in public relations, the La Jolla woman called a seat on the Board of Equalization “a wonderful opportunity to encourage women to start their own businesses.”

The Libertarian candidate, J.R. “Nobody” Graham of San Diego, said he “would always vote for the victim, never for the tax man.”