Race for California tax board gets unusually personal

SACRAMENTO — Contests for seats on the state tax board are typically low-profile affairs, but a battle between two lawmakers for one of the posts is shaping up as an ugly fight.

Assemblywoman Diane Harkey (R-Dana Point) and state Sen. Mark Wyland (R-Escondido) both say their business and finance backgrounds are the basis for their campaigns for the Board of Equalization, a five-member panel that collects a third of the state’s tax revenue.

But the race, to be decided in next year’s election, has increasingly focused on the legal troubles of Dan Harkey, the assemblywoman’s husband, and the digs between the candidates are getting personal.

The dispute even moved, briefly, to the courts. In September, Harkey filed a defamation suit against Wyland, who had talked about her husband’s problems in a speech to a local tea party group. She dropped the suit in November, but her campaign vowed to continue the fight in “the court of public opinion.”

“You can look at a lot of campaigns, and mostly it’s back and forth about policy, positions,” Wyland said. “This is something very, very different. This goes straight to someone’s qualifications to hold office on an ethical and moral basis.”

Harkey countered that making an issue of litigation involving her husband is “beyond the pale.”

At the heart of the matter is a lawsuit regarding Point Center Financial, a real estate investment firm run by Dan Harkey. In 2009, a group of clients, some of them retirees, sued the company for fraud. The assemblywoman was originally named as a defendant in the suit but was later dropped.

In July, a jury awarded the plaintiffs $10 million in damages after finding that the company acted with “malice, oppression or fraud” in breaching its fiduciary duties.

Wyland said the court case should be fair game in the campaign, even though Diane Harkey was dismissed from the suit.

“She has personally benefited from the retirement money of these victims — in an opulent lifestyle, in funding campaigns,” Wyland said. “To me, the only moral thing to do is to apologize to these victims and use her resources, which are from them, to make them whole.”

Harkey said the claim that her husband’s earnings have boosted her political career is sexist. She said she and her husband have long kept their finances separate and that she earned her own income from a banking career that preceded her entry into politics.

“We’ve had separate agreements as to who owns what,” she said. Wyland’s assertion “is a very chauvinistic, typical male assumption, and I think he’s out of line.”

The candidates have traded jabs in their campaign literature and on blogs such as the Flash Report, run by Jon Fleischman, a former state GOP official.

Fleischman said there was an “unusually high level of acrimony” in this campaign — a result, he said, of the candidates needing to differentiate themselves from one another.

“There is not a lick of difference between them on the issues,” said Fleischman, noting they were two of the four California lawmakers to get a 100% rating this year from the American Conservative Union, a political advocacy group.

Both lawmakers have had their eye on the Board of Equalization seat since 2011. Harkey’s endorsements includes incumbent Board of Equalization member Michelle Steel and U.S. Rep. Ken Calvert (R-Corona). Wyland’s supporters include former Gov. Pete Wilson and 2012 presidential candidate Mitt Romney.

The district they’re vying to represent encompasses Orange, Riverside, Imperial and San Diego counties. And the contest is expected to be costly.

Wyland has raised about $300,000 for his campaign. Harkey has brought in about $250,000 and has just over $100,000 in a Senate campaign account that can be transferred to next year’s run. Each candidate has also poured $100,000 in personal funds into the race.

A third candidate, former Assemblyman Van Tran, a Republican from Orange, entered the race in October and has not yet filed a campaign finance report.

melanie.mason@latimes.com