Posts Tagged ‘Board of Equalization’

Why Prop 26 is the Polluters Protection Act of 2010

Monday, October 4th, 2010

By Jean Ross
Special to Calbuzz

One of the least publicized measures appearing on the Nov. 2 ballot is one of the most mind-numbing but nevertheless one of the most important issues voters will decide.

Proposition 26 makes two major changes to the state’s constitution. First, it ­redefines some types of “fees” as “taxes,” thereby requiring two-thirds, rather than a majority, vote of the Legislature to increase or enact a fee at the state level. And it requires a vote of the people, rather than an action of a governing body, at the local level.

The debate over what’s a tax and what’s a fee is one of those “only in California” issues that dates back to Proposition 13 and its limitations on the Legislature’s ability to raise a tax and its subsequent requirement that local governments seek voter approval in order to impose or raise a tax.

Opponents of Proposition 26 have christened it the “Polluter Protection Act,” since the fees at issue are primarily those that regulate, mitigate and otherwise respond to environmental, health, and other social impacts of products and services. In other words, businesses seeking to avoid financial responsibility for the “externalities” of the products that they sell. Proposition 26 would not, in contrast, apply to fees paid by “ordinary Californians” such as community college and state park entry fees.

Proposition 26 is aimed at overturning a unanimous 1997 California Supreme Court decision in  Sinclair Paint Company v. Board of Equalization. The Sinclair decision upheld the constitutionality of a fee imposed on paint producers to defray the cost of services for children at risk of poisoning from lead-based paint.

The court found that such fees were regulatory fees – not taxes — and could be imposed by a majority vote. Sinclair built on the logic of a prior appellate court ruling that ruled that, “A reasonable way to achieve Proposition 13’s goal of tax relief is to shift the costs of controlling stationary sources of pollution from the tax-paying public to the pollution-causing industries themselves.”

Conversely, if the state can’t impose the fees on “pollution-causing industries” to recoup the cost of environmental monitoring and remediation, those costs will be shifted to taxpayers as a whole. Or, in an era where budget crises have become the status quo, programs that enforce environmental, food safety and other laws will be scaled back, if not eliminated. Which may be the true goal of the backers of Proposition 26.

If all of this wasn’t enough, Proposition 26 would also impose a two-thirds vote requirement for approval of “Any change in state statute which results in any taxpayer paying a higher tax.”

This is a subtle but important change from the state’s existing two-thirds requirement for any “changes in state taxes enacted for the purpose of increasing revenues.” It means that a bill that closed an obscure and ineffective corporate tax loophole, while lowering taxes for, say, all personal income taxpayers, would require a two-thirds vote.

More troubling, the language is sufficiently vague as to potentially allow a handful of lawmakers to block any bill, not just a tax bill that required anyone to pay a higher tax. How might this work? Think about future increases in the state’s minimum wage that increased the tax bill for low-wage workers or, at the higher end of the income distribution, an increase in Medi-Cal payments to physicians that also translate into higher incomes and income tax liability. Or seismic safety laws that require the purchase of sales-taxable building materials. You get the picture.

Because the “any taxpayer who pays a higher tax” provision is retroactive to January 1, 2010, Proposition 26 would also blow a $1 billion bigger hole in this and future years’ budgets by repealing a carefully crafted, revenue neutral “fuel tax swap” approved by the legislature earlier this year that was designed to give the state greater flexibility to use existing tax dollars to help close the budget gap absent subsequent two-thirds approval by the legislature.

The bottom line: Proposition 26 would take away one of the few remaining budget-balancing  tools from state and local governments, allow polluters and their allies to shift the cost of monitoring and remediating environmental and other hazards to the general public, make it even tougher to get rid of special interest tax breaks, and open the door to even more supermajority gridlock.

Voters got it right in 2000 when they defeated a similar measure 48-52%. Californians should tell the backers of Proposition 26 that the second time around isn’t a charm.

Jean Ross is the executive director of the California Budget Project

Press Clips: One Woman I-Team Sacks Tax Board

Friday, August 27th, 2010

Mega-kudos to Laura Mahoney, Sacramento correspondent for the Daily Tax Report and the winner of the Calbuzz Little Pulitzer for Investigative Reporting, for a superb, 25,000-word probe of the powerful, under-the-radar state Board of Equalization.

The only journalist who regularly covers the board, she  spent 18 months reporting and writing the five-part series, which reveals an incontrovertible pay-to-play connection between campaign contributions to its elected members and the outcome of tax appeals on which they rule.

“I realized when (the project) took me as long as it did to gestate my babies, I was in trouble,”  said Mahoney, a mother of two.

Known as “the Board of Eeek!” to generations of California reporters who quake with fear at the mere thought of covering complex financial stories, the BOE not only administers billions of dollars of tax collections, but also adjudicates disputes about them between the state and corporations or individuals.

Mahoney reports that California’s is the only such elected board in the nation with those dual roles. With its members (four are elected from districts of about 8 million people each, the fifth is the state controller) as dependent on special interest campaign cash as every other state pol, the  big accounting, law and other professional firms that do business with the board, along with their  PACs and high-end clients, are only too happy to accommodate.

Mahoney is a 20-year veteran of the Daily Tax Report, the flagship of BNA, a Washington-based publisher of  periodicals focused on high-level, specialized policy reporting for business and government. Besides the extraordinary level of detail and data analysis in her pieces, the strength of her reporting is the understated, dispassionate style and tone of her writing (kinda like us!), which makes her relentless accumulation of fact upon fact upon fact, and the conclusions she derives from it, that much more powerful. A summary of her findings begins:

Taxpayers with complex tax dispute cases before the California State Board of Equalization were more likely to win their cases if they or their representatives made campaign contributions to the elected board members, either directly or through political action committees, according to a detailed examination by Daily Tax Report, a BNA publication.

In a series of reports, BNA examined the outcomes of 70 complex, high-stakes cases argued before the board between 2002 and 2009, and compared those cases to publicly available campaign finance records.

BNA found more than $1 million in contributions to board members from taxpayers or their representatives who argue those cases before the board. All of the contributions were legal and contributors who spoke to BNA denied any causality between their contributions and success before the board.

We just bet they did. Check this:

However, a correlation appears to exist between contribution levels and success before the board, based on BNA’s original research.  BNA found that 20 of the 70 cases examined had less than $250 tied to them, and those taxpayers won their cases 30 percent of the time.

Success rates rose with higher contribution rates. Dividing the remaining cases in equal groups, BNA found another 17 cases had between $250 and $16,000 in contributions tied to them, and those taxpayers won 53 percent of the time. The next group of 16 cases had $16,000 to $50,000 tied to them, and those taxpayers won 75 percent of the time. The last group of 16 cases had $50,000 to $137,000 tied to them, and those taxpayers won 88 percent of the time.

Huh. Imagine that.

There’s lots more good stuff, as Mahoney names names, dissects the politics of the board’s operations and weighs the policy implications of what she found.

One of the conclusions of the final report of the governor’s tax reform commission released last year was that California should create an independent board to handle the politically charged issue of tax appeals.  So far, no one in the Administration or Legislature has seen fit to try to push such a reform.

After reading Mahoney’s special report, someone really, really should.

Cutting room floor:

Finally someone notices that the  “anti incumbent wave” of primary season is all about Republicans.

Lou Cannon’s take on mid-terms: mercifully free of heavy breathing

We’re still working our way through Todd Purdum’s big Vanity Fair piece on what’s wrong with Washington ‘cuz we keep stopping where he says $3.5 billion got spent on lobbying last year – $1.3 million for each day Congress was in session.

World’s only human shorter than Barbara Boxer gets it pretty much right.

Judge Vaughn Walker: liberal elite insider. Uh, wasn’t he appointed by a Republican?

What’s Obama’s problem?

A-He’s too condescending.

B-He thinks he’s Prime Minister.

C-He sold out much too fast.

D-He’s totally incompetent.

E-He doesn’t have a problem.

F-He’s easily intimidated.

G-His problem lies in the very nature of man.

Calbuzz sez: B, C and F.

In case you missed it: Since the whole dispute over the Manhattan Islamic community center erupted, we’ve been determined to keep Calbuzz a Ground Zero Mosque Free Zone. But we finally came across something that sums up our take, thanks to Aasif Mandvi.

Road Trip! National Affairs Desk Heads to San Diego

Friday, August 20th, 2010

The center of the political universe will shift to San Diego this weekend, as eMeg, iCarly and scintillating Board of Equalization candidates from throughout the state meet in solemn conclave in a city that actually selected the phrase “Happy HAPPENS!” as its official slogan.

Our National Affairs Desk, joined by the staff and Secretary of the Department of Social Anxiety, Recreational Usage and Hollow Leg Dinner Affairs will collaborate, coordinate and cooperate to provide Calbuzz readers 24/7, real time, deadline-every-minute-coverage of the Republican State Convention all weekend.

Unless there’s nothing worth writing, in which case you’re on your own.

On me!

(Inside tip for conventioneers: We hear Jon Fleischman is buying drinks for anyone who sees him at the Manchester Grand Hyatt convention hotel and says: “You really should plug Calbuzz more on Flashreport.”)

The weekend’s highlight is expected Friday night, when Meg Whitman,  widely known horsewoman and GOP nominee for governor, is to deliver a stemwinder called “Political Management by Corporate Objective: Using Corporal Punishment for Pushing State Employees to Work More for Less.”

She’ll be joined on the dais by fellow statewide candidates, “Taliban Tony” Strickland and Damon “Don’t Call Me Dominick” Dunn, who will attempt to explain to the assembled octogenarians and by-then-sleepy delegates exactly what it is that the Controller and Secretary of State actually do.


No word yet on whether birther whack job Orly Taitz, defeated by Dunn in the primary, will be on hand for the celebration. Hope springs eternal.

Keeping with the party’s “No Such Thing as a Free Lunch” theme, delegates and guests will be required to listen to Senate candidate “Hurricane” Carly Fiorina, AG hopeful Steve “Go Lakers” Cooley and Republican wannabe Insurance Commissioner “Landslide Mike” Villines, in order to have their mid-day meal tickets punched on Saturday.

That night’s headliner will be right-wing favorite and Lite Gov. Abel “Tax Man” Maldonado. Which is too bad for him, since most of the press corps will be chopping it up at the Dr. Hackenflack Dinner, except for the unfortunate Joe “Paisan” Garafoli and Torey “The Tulip” Van Oot, who somehow got stuck doing the pool report.

Watch this space all weekend for on-the-scene reporting of all the Republican hijinks and general hilarity. Plenty of free parking.

Out Foxed: There was lots of fierce competition for this week’s Little Pulitzer False Equivalence Award, what with Newt Gingrich equating construction of a Muslim community center two blocks from Ground Zero to Nazis putting up a sign next to the Holocaust Museum in Washington  (he was kicked out of the competition because of the automatic disqualification rule for anyone using a Nazi comparison to describe American politics).

The runner-up was Team Whitman, for its ongoing, flog-a-dead-horse attempt to equate eMeg’s $100+ million champagne taste campaign spending with the beer budget, Bad News Bears efforts of the California Working Families for Jerry Brown independent expenditure committee, which is kind of like comparing a Bugatti Veyron to a Nissan Versa. (Memo to eMeg Communications Shop: This whole “Jerry Brown Inc.” thing is hella’ lame, and the real problem is that it just doesn’t make any sense. Think about it for one minute: your whole line of attack on Krusty is that he’s bought and paid for by unions; so your tag line therefore portrays him as an evil corporation? C’mon. But we digress).

The week’s hands-down winner, however, was Calbuzz friend Joel Fox, usually one of our favorite conservative bloggers.

The weak gruel defense Fox offered up for refusing to make public the names of the contributors footing the bill for his operation to air a straight-on, anti-Brown attack spot in the guise of an alleged “issues ad” not only compared his donors to Revolutionary War patriots (sheesh) but also  evoked the First Amendment as the basis for his stonewalling.

Reporters said that donors to the ad should be disclosed even though that is not required, and these same reporters defend not disclosing their sources at times and often for the same reason…

Reporters defend a similar course of keeping sources protected from retribution by not disclosing them. Speaking the truth about an issue can displease politicians who have the power to punish through regulations, lawsuits, and other means..

Excuse us while we build a coliseum big enough to hold our laughter.

Comparing reporters protecting whistleblower sources from punishment and retribution for calling attention to public and private wrongdoing is only exactly 180 degrees different from letting a squadron of stuffed-wallet suits and corporate sultans slither away from the spirit of the law by sucker punching a political candidate under cover of secrecy.

Alas, we fear that Joel has conflated the First Amendment freedom of the press with the Fifth Amendment protection against self-incrimination.

We got nothin’ against anybody spending their however-gotten gains any way they like, including pitching in to help a poor rich gal who’s down to her last 12 or 13 zillion dollars win an election. But at least man up and take some personal responsibility for the decision to do it. We’re just sayin’.

Final word: Calbuzz mourned on Monday, when baseball immortal Bobby Thomson passed away at the age of 86. The great New York Giants second baseman was the author of the “Shot Heard ‘Round the World,” the most magical moment in baseball history.

On Oct. 3, 1951, Thomson lined a three-run, walk-off homer in the bottom of the ninth off Ralph Branca, completing one of the greatest pennant stretch runs in baseball history, as the G-men bested the dog-ass determined Dodgers in a three-game playoff to win the National League championship and advance to the World Series.

Here’s the famous Russ Hodges call of the play, one more time for the Flying Scotsman. 


Roll ‘Em and Tax ‘Em: What Gov Contenders Say About Legal Pot

Thursday, May 7th, 2009

One day after Gov. Schwarzenegger said it was high time for a debate about legalizing and taxing marijuana, Calbuzz rolled up our sleeves and set out to score the views of the candidates who want to succeed him.

The governor’s comment came as a new Field Poll showed that 56% of Californians support the notion of taxation with legalization for pot, an idea that Democratic Assemblyman Tom Ammiano of San Francisco has proposed in AB390.

According to a February estimate by the Board of Equalization, legalizing pot could raise an estimated $1.34 billion annually in tax revenue, although there might be a concomitant decline in tax income from cigarettes and booze.

Arnold may not be in favor of legalized pot today, but he was filmed smoking a doobie in the 1977 film, “Pumping Iron.” “That is not a drug. It’s a leaf,” he told a British magazine in 2007.

Since the wannabe governors surely won’t have a joint press conference on the issue, we decided to hash out the differences among and between them by posing a simple question, without getting into the policy weeds of Ammiano’s 26-page bill:

Given the state’s fiscal challenges, would you as governor support increasing revenues by legalizing, regulating and taxing marijuana for recreational use? Why or why not?

The answers ranged from Tom Campbell’s openness to the idea through Jerry Brown’s magisterial avoidance and Meg Whitman’s unadulterated “No Way, Mary J!” Here’s what they said:


Tom Campbell: “I’m entirely open to getting a good, qualified and balanced report on this question. I’m not for legalizing on the basis of what I know now. However, I am for devoting scarce enforcement dollars to drugs like meth; and I have long favored allowing medical marijuana use. I have been critical of the use of federal resources to close down medical marijuana dispensaries that are legal in California.”

Meg Whitman: “I am absolutely, 100% not in favor of legalizing marijuana for any reason.” (What about to increase tax revenues?) “That is the last reason that one should think about legalizing marijuana.” (BTW: It was good to see Whitman answer the question at a brief press avail in San Francisco after our Calbuzz Rant yesterday. Our follow-up to Meg is this: By “any reason” do you mean you oppose the medicinal use of marijuana?)

Steve Poizner: “Like electing Jerry Brown as governor, the idea of legalizing drugs is one more bad idea from a bygone era. Nor can California smoke its way out of the structural budget deficit. The best way to increase state revenues is to grow the whole economy. Only those who are smoking something think tax increases will lead to economic growth.”


Jerry Brown: “I’m not prepared to comment on it at this point. I’m not a gubernatorial candidate, No. 1, and as attorney general, I’m not prepared to comment.” As for a discussion of the fiscal merits, Brown added: “I wouldn’t limit myself to that topic. We need a wide ranging exploration of revenues, cuts, changes and reforms in government over the next decade.” [Doesn’t sound like the state’s top cop will be joining these guys anytime soon.]

Gavin Newsom: “I will always be a strong advocate for legalized medicinal uses of this substance, it’s something that I have fought for — and will continue to fight for as governor. But I do not believe that blanket legalization and taxation is a responsible way to balance the state’s budget.”

Antonio Villaraigosa: No response. Must be those damn emergency budget crisis meetings again. We did get this from one of Tony V’s consultants: “As you are well aware, Antonio is not currently a candidate for governor.” Okey doke, then.

BTW: A shout-out to our friend Carla Marinucci at the SF Chronicle, who managed to get a few questions in at Meg’s press avail yesterday.

Campbell: Remap Issue Helps Him with GOP Voters

Tuesday, May 5th, 2009


Tom Campbell fears that Pennsylvania Sen. Arlen Specter’s defection to the Democrats will damage the Republican brand. But he still believes California GOP voters may choose him as their candidate for governor for pragmatic political reasons.

The moderate Campbell, in an email exchange with Calbuzz, said that while Republicans nationally are moving increasingly to the right, he could “unify” the state GOP in the same way Pete Wilson did in 1990, around the issue of congressional redistricting.

“The best evidence” that a moderate can win the Republican primary, he said, “is Pete Wilson’s being embraced by the social conservatives when he ran for governor in 1990.” (Of course, Wilson was already in the U.S. Senate and state party brahmins were desperate for a slam-dunk candidate to follow George Deukmejian.)

Although Proposition 11, which was passed last November, handed to an independent commission the once-a-decade job of redrawing Assembly, state Senate and Board of Equalization districts, the power to draw new maps for House seats remained in the hands of the the Legislature and governor.

Campbell thinks that despite his conflicts with the Republican right-wing over social issues – as well as his current support of Proposition 1A on the May 19 special election ballot – he is positioned to make an electability argument in the primary against Meg Whitman and Steve Poizner.

“The new governor will preside over the congressional redistricting,” he told us. “That is a huge issue to all Republicans, and was a large factor in Pete’s ability to unite the party behind his gubernatorial candidacy in 1990 (it included the Legislature too, then).”

Campbell cited his own congressional service as evidence of the importance of having a Republican governor. In 1988 he was elected to the first of two terms in the 12th congressional district seat in Silicon Valley; after giving up the seat to run unsuccessfully for U.S. Senate in 1992, he won a special election for the 15th congressional district, when incumbent Norm Mineta took a cabinet post with the Clinton Administration.

“I was first elected under the gerrymandered map from 1980, Jerry Brown was the governor, the Legislature was Democratic-controlled, and I recall being one of 21 Republicans, with 31 Democrats, in the California Congressional delegation (Please forgive me if that’s not perfect, I’m doing this from recall),” he said. “When I was elected in the (Mineta) special in 1995, it was in a district drawn by the California Supreme Court, because Gov. Wilson had vetoed the Democratic Legislature’s map, and I recall making the delegation an even 27-27 split.

“That shows the difference fair district lines can make; and the importance of having a Republican Governor,” he added. “That won’t be lost on the GOP rank and file.”

But Campbell also acknowledged that Specter’s party switch symbolizes a troubling trend for Republicans nationally, as the dominance of the party’s right-wing makes moderates increasingly uncomfortable.

“The more that moderates leave the party, obviously, the less centrist it becomes. Most Americans, and Californians, seek solutions in the center. So the Republican label becomes less attractive. We can safely assume that Democratic candidates will try to say all Republicans are extremists.”

But that doesn’t mean Campbell sees himself as a switch hitter.

“I don’t see a change of parties in my future, “Campbell said. “I don’t think any candidate ever fits perfectly in any party, but in my case the fit with the Republican Party is much closer than it would be with the Democratic Party.”

You gotta admire Campbell’s persistent search a positive angle and he may be right that in a general election for governor he’d be a strong contender against any of the Democrats now lined up. But Calbuzz is far from persuaded that GOP primary voters will set aside their differences with Campbell on abortion, gay rights and Proposition 1A, to vote in favor of electability.