California Governor Urged to Create Tax Court, Dissolve Board

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By Laura Mahoney

Now that California Gov. Jerry Brown (D) has asked lawmakers to enact changes by June to fix the troubled State Board of Equalization, friends and critics of the elected board are offering suggestions.

Quentin Kopp, a former state senator and retired Superior Court judge, told Brown in an April 17 letter that he should call for a state constitutional amendment to dissolve the SBOE and replace it with a tax court.

Kopp told Brown the tax court should have members appointed by the governor and confirmed by the Senate. He noted that California is the only state with an elected body that adjudicates tax disputes. The SBOE is the result of a 1934 political compromise when the state sales tax was enacted, he said.

“It’s not just an anomaly; it’s an embarrassment to the notion of good government in California,” Kopp said. “If you are serious about exposing and securing judicial punishment of illegal Board of Equalization activity, you will secure authors to introduce such legislation forthwith for the June 2018 statewide ballot.”

Brown issued an April 13 letter to the five-member board informing them that he has suspended their authority to handle personnel, contracting or technology matters and has asked the Department of Justice and Department of Human Resources to investigate the board for potential misuse of state resources. The scathing audit from his Office of State Audits and Evaluations found board members intervene in daily operations of the tax agency, use staff to promote personal events and threaten senior managers if they don’t go along.

Brown also asked the Legislature to identify and enact statutory changes to address problems at the board by June 2017.

Failed in 1998

Kopp authored successful legislation in 1990 to set campaign contribution limits from taxpayers with appeals before the board to its five elected members. He also authored a failed bill in 1998 to create a tax court.

“My legislation failed primarily because a revered State Senate colleague, whose term ended in 1998, intended to seek election (and did) to the Board of Equalization (The irony is that he was defeated by a Republican assemblyman who also needed a public office to exist),” Kopp said in his letter.

SBOE Member Jerome Horton (D), who is at the center of many of the issues raised in a recent state audit that prompted Brown’s call for legislation, wrote his own letter to Brown April 17 with suggestions.

‘Abandonment of Duty’

In the two-page letter with 13 pages of exhibits, Horton accuses his fellow board members and executive management of failing to provide information to auditors for Brown’s Office of State Audits and Evaluations.

“In my 29 years with the BOE, 22 years as staff and 7 years as a Member of the Board, I have never seen such abandonment of duty to respond and to be transparent; and I question why this is the case,” Horton said.

In addition to suggesting information Brown should request and review, Horton suggested statutory changes. Several of them would undermine the SBOE’s role as adjudicator of disputes between the state and taxpayers:

  •  “The Legislature should consider a provision allowing for a high-level legal review of all BOE decisions by the Attorney General upon approval of an independent panel of experts to assure that all decisions are consistent with the law, beginning with decisions made by the Board from January 5, 2015 to March 1, 2017, where there was a 3-2 split vote.”
  •  “The Legislature should require the BOE to provide the Legislative Analyst’s Office summary of all precedential decisions under the law—subject to adequate protections for taxpayer confidentiality—on whether the BOE has a legislative basis for the decisions.”

Rob Lowe

Horton didn’t say why he called for further legal review of SBOE rulings in taxpayer appeals beginning Jan. 5, 2015. He was chair of the SBOE from 2011 to February 2016, which made him the longest-serving board chair since 1946.

However, in February 2016 he challenged the legality of the board’s 3-2 decision to grant an income tax appeal from actor Rob Lowe. In a news release at the time, Horton called the board’s move a gift of public funds.

“I love Rob Lowe’s movies, but not enough to gift him $514,000 of California’s taxpayer dollars,” Horton said at the time.

The five-member board was scheduled to discuss a letter to the Legislature “affirming the importance of appeal rights to taxpayers” at its next board meeting April 25. That item was deleted from the agenda April 19.

To contact the reporter on this story: Laura Mahoney in Sacramento, Calif. at

To contact the editor responsible for this story: Ryan C. Tuck at

For More Information

Text of Kopp's letter is at

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