California is home to the nation’s only elected state tax board, though many Californians would be hard- pressed to name a single member of the obscure panel.
FOR THE RECORD: A headline with an earlier version of this story incorrectly referred to the Franchise Tax Board instead of the Board of Equalization.
The board’s low public profile, however, belies its powerful role. The Board of Equalization is the final arbiter in state taxpayer disputes and determines which corporations are eligible for tax breaks — and how big those breaks are.
This year, all four seats on the tax panel are up for election in June. And despite anti-tax “tea party” protesters taking to the streets across the nation, threatening to oust incumbents at all levels of government, three board incumbents are running with only token opposition. In the fourth contest, three Republicans are jostling to prove which of them is most conservative.
“In a Republican race, the name of the game is to try to be the most conservative,” said Alan Nakanishi, a physician and former assemblyman from Lodi, one of the top three in the heated GOP contest. “The fact of the matter is all three us have the same ideology: smaller government, taxpayer advocates, less taxes.”
The state’s tax laws are written by the Legislature. But the tax board is charged with interpreting gray areas of the tax code. “If the laws are vague,” Nakanishi said, “I’ll be with the taxpayer.”
In 2004, the board distributed tens of millions of dollars in refunds to companies that paid no state income taxes but nonetheless sought to take advantage of manufacturing-equipment tax credits. Many in the Legislature, including lawmakers who had voted to create the tax credits, were outraged but powerless to stop the checks from being issued.
One of Nakanishi’s top GOP opponents, Barbara Alby of Fair Oaks, worked as the top deputy to former board member Bill Leonard for seven years until Leonard resigned to take a job in Gov. Arnold Schwarzenegger’s administration in March.
Alby, a former state assemblywoman who described herself as “very, very conservative,” became the acting board member by state law. Now, she’s running for a full term.
Though Alby has spent much of her career in and around the state bureaucracy, she described herself as “one of those people who’s not very enamored with government.”
While she was a Leonard aide, ethics experts raised questions about her simultaneously being paid, along with Leonard’s wife, by a tiny nonprofit that collected tens of thousands of dollars in donations from businesses that interacted with the tax board. The nonprofit then used that money to fund an annual retreat for lawmakers, lobbyists, tax board members and their families in Maui.
The third GOP candidate is state Sen. George Runner of Lancaster, who has been a proponent of tough-on-crime measures, including Jessica’s Law, which severely restricted where convicted sex offenders may live. Runner has been among the Legislature’s most ardent opponents of taxes, though he has often promoted expensive law-and-order ballot measures without identifying revenue to pay for them.
“The government has enough money,” Runner said. “I don’t believe you have an obligation to find where the money comes from. . . . People are prioritizing the tax dollars they are already paying.”
The three Republicans are competing to represent a sprawling inland district that stretches from northern Los Angeles County to the Oregon border. The district’s expanse, combined with the general anonymity of the tax board, renders most campaign tactics moot. It’s either too time-consuming or too expensive to reach 9 million residents.
Much of the political jockeying has involved the job title that candidates list on the ballot. For most voters, “all you’re going to see is the name and three words” — the maximum allowed, Nakanishi said. “So it’s important.”
Alby, thanks to Leonard’s resignation, has perhaps the most enviable designation: “acting Equalization board member.” She said her mentor’s resignation “was a shock to me” and not part of any preplanned political calculation.
A fourth Republican, Ed Streichman, a Board of Equalization auditor from Fresno, is running for the seat after losing badly in 2006. Two Democrats, Chris Parker, a tax counselor in Sacramento, and Mark Stebbins, a businessman in Stockton, are also running.
Contorted district boundaries all but ensure that the tax panel will remain divided ideologically, with two Democrats and two Republicans, after this year’s elections. The tax board’s fifth seat — and the key to its balance of power — is held by California’s controller, who is elected statewide.
None of the other incumbents faces much competition.
GOP tax board member Michelle Steel of Rolling Hills has two primary opponents. Spring Valley engineer Vic Baker, has 21 supporters on Facebook. Her Democratic challenger, Mary Christian Heising of La Jolla, has been a perennial loser in a district that includes much of Southern California outside of Los Angeles.
Democrat Jerome Horton is running for a full term on the board’s Los Angeles County-based seat. Gov. Arnold Schwarzenegger appointed Horton last year, after Judy Chu (D-Monterey Park) left the board for a seat in Congress. Horton has no challenger.
The final board district takes in coastal California, from Oregon to Santa Barbara. Democratic incumbent Betty Yee of San Francisco faces two underfunded primary challengers: Ted Ford, a Walnut Creek economist, and G. Alan Montgomery, an investor from Campbell. Also running are two Republicans: Kevin Scott, a venture capitalist in Redwood City, and Rae Williams, a Saratoga woman who listed her occupation as mother.