1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 MAY 27, 2015 10 11 12 13 ITEM P 14 OTHER ADMINISTRATIVE MATTERS 15 ITEM P1 16 EXECUTIVE DIRECTOR'S REPORT 17 1. UPDATE ON BOE ALIGNMENT 18 19 20 21 22 23 24 25 26 27 REPORTED BY: Kathleen Skidgel 28 CSR NO. 9039 1 1 P R E S E N T 2 3 For the Board of Equalization: Sen. George Runner (Ret.) 4 Vice Chair 5 Fiona Ma, CPA 6 Member 7 Diane L. Harkey 8 Member 9 Yvette Stowers 10 Appearing for Betty T. Yee, State Controller 11 (per Government Code Section 7.9) 12 13 Joann Richmond Chief, Board Proceedings 14 Division 15 Cynthia Bridges Executive Director 16 17 18 ---oOo--- 19 20 21 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 MAY 27, 2015 4 ---oOo--- 5 MS. RICHMOND: Our next item is item P, 6 Other Administrative Matters. P1 is our Executive 7 Director's Report. P1.1 is Update on BOE 8 Alignment. 9 MS. BRIDGES: Good afternoon, Vice Chairman 10 Runner and Members. 11 Today I come before you to provide an 12 update on the BOE's ongoing functional alignment, 13 specifically to inform you of our current plans for 14 the next phase. 15 A full briefing on the implementation plan 16 at each stage will be provided once we have 17 concluded our analysis, which will include, of 18 course, communications to our BOE employees and 19 stakeholders. 20 In Phase 1, as -- by way of background of 21 functional alignment, BOE's Property and Special 22 Taxes Department recognized -- reorganized the 23 Special Tax and Fee Programs along functional 24 alliance. 25 Prior to the reorganization, each 26 program -- which included fuels, excise and 27 environmental taxes -- had its own audit, 28 compliance, return processing and policy functions. 3 1 After the reorganization, these core functions were 2 combined for all Special Taxes and Fee Programs; and 3 the goal of combining these functions was to reduce 4 duplication, particularly in the administrative area 5 and promote a working environment in which they 6 could share best practices. 7 The BOE, as an agency, is embarking upon 8 the second phase in this important process to 9 enhance our operational efficiencies and 10 effectiveness. This phase will align the Sales and 11 Use and the Special Tax and Fee Programs along 12 operational lines into a new Tax and Fee 13 Administration Department. Due to the volume and 14 complexity of taxes, this alignment will be 15 implemented in phases. 16 Phase 2-A will begin with the establishment 17 of a Field Operations Department comprised of the 18 existing Field Operations Division from the current 19 Sales and Use Tax Department. The new Field 20 Operations Department will continue to focus on 21 executing the core functions of audit, collections, 22 taxpayer assistance and educational services, 23 etcetera, primarily related to the sales and use 24 tax. 25 This change will also afford the field 26 operations a better opportunity to address the tax 27 gap and other issues and concerns based on the 28 varying demographics in the respective field offices 4 1 and also increase prospects for improved customer 2 service and responsiveness to stakeholders. 3 The remaining business units of the Sales 4 and Use Tax Department will be renamed the Tax and 5 Fee Administration Department in preparation for 6 further alignment opportunities with the Special 7 Taxes and Fees Programs. This unit will encompass 8 tax program administration functions such as 9 operational policy, refunds, processing, return 10 processing, support to field operations, and 11 etcetera, associated with the sales and use taxes. 12 This will also allow them to optimize 13 administrative operations and to focus attention on 14 supporting functions to enhance service delivery to 15 internal and external customers. 16 Key staff from the new Field Operations and 17 Tax and Fee Administration Departments will work 18 together to manage the logistics associated with 19 this initial phase and provide a report by July 1, 20 2015. 21 Additional phases to be contemplated 22 include aligning administrative functions of both 23 the Sales and Use, Special Taxes and Fee Programs, a 24 greater focus in efficiency regarding the processing 25 of returns and payments and the accounting 26 allocation and distribution of tax and fee 27 revenues -- excuse me -- and the provision of 28 taxpayer assistance and education service. 5 1 These changes will fulfill the 2010/2015 2 strategic vision of the Board which was -- or 3 includes realignment of the organization to operate 4 more efficiently and restructuring the organization 5 to align functions more effectively. 6 These structural changes are also 7 consistent with the best practices of modern tax 8 administration where functions housed within 9 different tax programs are aligned and rationalized 10 for maximum efficiency and effectiveness to enhance 11 voluntary compliance and improve customer service. 12 Let me reiterate that as we move forward, 13 you have our deep commitment to assure that 14 communications with our stakeholders and our BOE 15 employees will remain at the forefront and that it 16 is our duty to assure that you, as Board Members, 17 are fully briefed regarding each phase of the 18 functional alignment process. 19 Thank you. And if you have any 20 questions -- 21 MR. RUNNER: Question from Members on this 22 first step of alignment? 23 Okay. 24 We'll go on to the next item. Thank you. 25 ---oOo--- 26 27 28 6 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, KATHLEEN SKIDGEL, Hearing Reporter for 8 the California State Board of Equalization certify 9 that on May 27, 2015 I recorded verbatim, in 10 shorthand, to the best of my ability, the 11 proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 1 through 6 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: June 26, 2016 18 19 20 ____________________________ 21 KATHLEEN SKIDGEL, CSR #9039 22 Hearing Reporter 23 24 25 26 27 28 7