California Taxpayer Accounts Shifted Improperly: BOE Chair

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By Laura Mahoney

Allegations are flaring between elected California State Board of Equalization members about improper movement of taxpayer accounts and placement of new offices in response to questions from a California legislator who oversees the tax agency’s budget.

SBOE Chair Fiona Ma (D) alleges that member and former chair Jerome Horton (D) improperly moved the administration of at least 25,000 taxpayer accounts in 2014 from her district just before she took office so they could be managed through an office in his district.

Ma told Bloomberg BNA she learned the accounts were moved in December 2014, in the weeks between her election in November and her swearing in Jan. 5, 2015. Once she was in office, she pressed SBOE senior staff members for six months to move them back because taxpayer accounts are typically assigned to offices within the district of the member representing them.

“We represent a district of more than 10 million people,” Ma said Feb. 14. “You are responsible and accountable to those 10 million people.”

Not Board Policy

In a written response to questions from Bloomberg BNA, Horton said Feb. 14 that the information from Ma “is inaccurate and not reflective of board policy.” He directed to SBOE Executive Director David Gau questions about new offices, relocation of existing offices and the movement of staff to and from the office in question. He didn’t address questions about the alleged movement of taxpayer accounts.

Ma told Assemblyman Jim Cooper (D) in a Feb. 9 memo that the taxpayer accounts were moved without transparency. Cooper chairs the subcommittee that oversees the SBOE budget and was a member of the subcommittee in 2016 when lawmakers put the tax board under a microscope about its office space and staffing around the state. He will preside over hearings about the SBOE budget in the next few months.

Last year’s scrutiny spurred public disagreements between board members about how they approach tax administration. Ma told Bloomberg BNA in April 2016 that she doesn’t want her constituents going to offices in Horton’s district because the auditors there are much more aggressive than in other members’ districts.

“I’ve said it before,” she told Bloomberg BNA Feb. 14. “Nothing is equal at the Board of Equalization.”

No Public Discussion

The SBOE administers state sales and use tax and more than 30 other special taxes and fees.

In her memo to Cooper, Ma said member George Runner (R) and former member Betty Yee (D) weren’t informed at the time the accounts were moved in 2014. The union representing state workers affected by the move also wasn’t informed, she said.

“There was no public discussion and vetting of the above initial redistribution of staff and accounts in December 2014 to the Ventura office thus Ms. Ma’s request to reverse the transfers was accommodated in the spirit of transparency and accountability,” the memo said.

Ma’s memo was a response to a Jan. 31 letter Cooper sent to Gau asking him to justify the reassignment of employees and accounts from the agency’s Ventura County office to offices in Ma’s district in 2015, but not the 2014 move of the accounts from her district to Ventura. Cooper asked whether the state workers’ union and employees were consulted and to provide State Personnel Board rules that justified the relocation of employees from Ventura to San Jose.

New Boundaries

Ma told Bloomberg BNA that she saw Cooper’s inquiry when it reached Gau and chose to respond herself because she was directly involved with the issues raised. Gau became SBOE executive director in March 2016, after the disputed movement of taxpayer accounts happened.

Ma took over Yee’s district at the same time boundaries for the four SBOE geographic districts changed as part of a statewide redistricting for all elected offices. As of Jan. 5, 2015, Horton’s Los Angeles district expanded to include Ventura County, Runner’s inland district no longer represented Ventura or parts of Santa Barbara County, and Ma’s coastal district represented all of Santa Barbara instead of only coastal areas that Yee had represented.

The accounts at issue came from Santa Barbara County and neighboring San Luis Obispo County and were serviced by offices in Salinas and San Jose, in Ma’s district, before they were moved to Horton’s office in Ventura.

Surprise Move

Runner confirmed with Bloomberg BNA Feb. 13 that he was surprised to learn after the fact that the accounts were moved out of his and former SBOE member Yee’s districts into Horton’s district in 2014.

“Somewhere along the line, the accounts got moved without my knowledge,” Runner said.

Runner said he supported Ma’s efforts to move them back to her district because he believes taxpayer accounts should be handled within the district of the SBOE member who represents them. In rare instances, members agree to have accounts within their districts handled in another member’s office for practical reasons, he said.

Ma and Runner both said they haven’t heard complaints from taxpayers about the level of service they’re receiving through various SBOE offices in their districts, so it’s not clear why accounts needed to be moved.

Yee OK’d Shift

Yee told Bloomberg BNA in a Feb. 13 e-mail that she was aware administration of the accounts was being moved out of offices in an area she represented at the time to increase efficiency. She said she agreed because the San Jose office mainly handled complex accounts. Yee remains on the SBOE as the state controller, rather than as a member representing one of the four elected districts.

“In 2014, BOE staff suggested the realignment of accounts being served by the San Jose District Office to the Ventura District Office,” she said. “I was told this operational change would have no impact on agency employees.”

The staff member who suggested the move of taxpayer accounts no longer works for the SBOE. It is unclear how many employees were moved to or from the Ventura office.

Family at SBOE

Cooper told Bloomberg BNA Feb. 13 that he wasn’t aware that the accounts were moved first from Ma’s district to Horton’s, but if that is the case, he’s “fine with that.” He said he is asking questions about the board’s offices and practices based on concerns that he and Assembly Speaker Anthony Rendon (D) share.

Cooper’s wife and daughter work at the SBOE headquarters in Sacramento, and his daughter is assigned to assist Horton in her position on the agency’s outreach staff.

In an interview, Cooper objected to questions about his role overseeing the budget of the agency where his wife and daughter work, saying his wife worked at the SBOE before he was elected to the Assembly and he doesn’t know what his adult daughter’s job entails. He lives in a Sacramento suburb and has many friends and family who work for the state, he said.

“If people are trying to imply there is something inappropriate here, I take great offense to that,” Cooper said. “I will end this conversation.”

Some Offices, Not Others

Cooper also asked Gau to provide information about movement of staff between new offices opened in Rancho Cucamonga in 2015 and Santa Clarita in 2014 in Runner’s district, and an existing office in Riverside in member Diane Harkey’s (R) district. He asked whether redistribution of staff positions and workload for those offices complied with state employment rules and whether demand for services in the offices changed.

Cooper didn’t ask whether other new offices, opened in Glendale in 2015 and El Segundo in 2014 in Horton’s district, also complied with state rules or affected demand for services.

In his response to Bloomberg BNA, Horton didn’t address questions about Cooper’s lack of inquiries related to new offices in his district.

Runner told Bloomberg BNA that Cooper’s letter has a “suspicious tone.”

“If we do have members who are trying to use the Legislature to pursue an agenda, that would be unfortunate. I would be very disappointed,” he said. “That’s why I’m seeking a meeting with Assemblyman Cooper to discuss these issues and get some answers.”

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

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