State investigators probe troubled tax board

SACRAMENTO — Investigators from the California Department of Justice have interviewed staff members at a troubled state agency that collects more than $60 billion in taxes, which lawmakers voted last week to break up, officials confirmed Tuesday.

Civil servants and executives from the Board of Equalization have spoken with investigators, board spokesman Paul Cambra confirmed. Board officials declined to say who has spoken to investigators or what was discussed.

Democratic Gov. Jerry Brown in April asked Attorney General Xavier Becerra to investigate the agency after an evaluation by the Department of Finance found millions of dollars misallocated without explanation. The evaluation alleged that the board had seen a rise in spending on activities unrelated to its role administering state taxes, and that public employees were inappropriately assigned to outreach and political duties.

Brown’s letter asked Becerra’s office and the state Department of Human Resources to “coordinate the investigations of Board employee complaints and the potential misuse of state resources.”

“The Board exists to serve the public, and the (Finance Department) report highlights the extent to which it has fallen short,” Brown wrote.

The Board of Equalization, comprised of five elected officials, collects about a third of California’s revenue from 30 tax and fee programs. It also equalizes property taxes between counties and decides tax disputes. But it’s soon to lose most of its power and 4,300 employees under a restructuring approved by lawmakers last week in a budget bill, which Brown plans to sign. It will transfer most of the board’s functions, including its power to settle tax disputes, to new state agencies overseen by Brown appointees.

The Department of Finance’s evaluation alleges that board member Jerome Horton reassigned public employees to work for him, opened a call center in his district without the consent of other board members and held outreach events unrelated to the board’s mission. The review also found that 113 employees of the board helped with parking and registration at an event in Escondido that was sponsored by board member Diane Harkey.

“To protect its integrity, we can’t comment on an ongoing investigation,” Becerra spokeswoman Bethany Lesser said in an email. A Department of Human Resources spokesman declined to comment.

All five board members said they had not been contacted by investigators.

“I have no idea what they’re looking into at all,” board member Fiona Ma said. “If people are doing things inappropriately, then of course I appreciate the oversight from any and all agencies.”

She said she and her staff had “been getting a lot of anonymous emails and letters, but nothing warranting a criminal investigation.”

It’s no surprise that state investigators are “following up” on the issues raised in the state evaluation, board member George Runner said.

“I just think this is a pretty normal process right now to at least have some discussions,” he said.

The interviews by investigators were first reported by the Sacramento Bee.