To put it mildly, the elected members of the state Board of Equalization are unhappy that the huge tax collection agency is being dismantled.
Last month, in response to revelations in numerous audits and journalistic investigations, the Legislature and Gov. Jerry Brown stripped the board of about 90 percent of its authority over sales and other taxes, leaving it with only a few constitutional duties relating to property taxes.
In its stead, a new state revenue department is being formed to collect billions of dollars a year in taxes, along with an appeals mechanism to handle tax case disputes.
Diane Harkey, the former Orange County Assemblywoman who chairs the board, expressed her displeasure in an Orange County Register article, to wit:
“How did an elected board established in 1879, which launched the careers of numerous state treasurers, controllers and others statewide, suddenly become such a bad board? The truth is we were actually finally addressing some long-time, systemic problems: lack of training, ignoring policies and procedures, members exceeding boundaries of authority, and tools for oversight that were woefully inadequate, which seems to be the practice in our state.”
It’s a weak defense of a board that had been an embarrassment for decades, kept alive only because it was a landing spot for otherwise unemployed politicians such as Harkey.
However, in trying to defend the board, Harkey’s article did make a valid point about something else awry in state government.
She wrote, “In a report released last week, the state auditor noted that the state spent $44 billion on noncompetitive contracts worth $1 million or more between 2011 and 2016, and yet the report gets a standard nod. Perhaps reforming in this area might not be healthy for a political career in California, especially if the contracts lead to political clout or even campaign contributions.”
The state’s obvious deficiency in overseeing service and supply contracts is not a valid reason to keep the Board of Equalization in business, but it should be a concern unto itself.
State Auditor Elaine Howle did, indeed, find that the Departments of General Services and Technology have had a bad habit of issuing contracts, or approving those issued by other agencies, without competitive bidding.
State law generally requires competitive bidding unless an agency can demonstrate some valid reason, such as an emergency or the lack of alternative suppliers, for a sole-source contract.
The reason is simplicity itself: Competitive bidding guards against favoritism, fraud and/or corruption and, in general, provides a better deal for taxpayers.
However, Howle’s investigators found that, in effect, those charged with enforcing competitive bidding lazily rubber-stamped agencies’ decisions to bypassing bidding – particularly, it seems, when contracts’ costs mushroomed due to amendments or add-ons.
Moreover, a very expensive computerized information system that was supposed to give overseers more information about contracts has not been fully implemented, and even where it is in place, is often underused. Some agencies, such as the Department of Corrections and Rehabilitation don’t even have plans to use the system, which has the catchy title of FI$Cal.
“Although both General Services and Technology have mechanisms they can use to encourage agencies to comply with noncompetitive procurement policies, they rarely employed them during our five-year audit period,” Howle’s office concluded.
That’s bad business, and politicians should be as intolerant of it as they finally became of hijinks at the Board of Equalization.
CALmatters is a public interest journalism venture committed to explaining how California’s Capitol works and why it matters. For more stories by Dan Walters, go to calmatters.org/articles/author/dan-walters. Dan Walters: email@example.com