1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 5901 GREEN VALLEY CIRCLE 3 CULVER CITY, CALIFORNIA 4 5 6 7 8 TRANSCRIPT OF PROCEEDINGS 9 (Prepared from audio recording) 10 NOVEMBER 17, 2015 11 12 13 14 15 16 CUSTOMER SERVICES & ADMINISTRATIVE EFFICIENCY 17 COMMITTEE 18 19 20 21 22 23 24 25 26 27 PREPARED 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 Chair 5 Jerome E. Horton Member 6 Fiona Ma, CPA 7 Member 8 Diane L. Harkey Member 9 Yvette Stowers 10 Appearing for Betty T. Yee, State Controller 11 (per Government Code Section 7.9) 12 13 Joann Richmond Chief 14 Board Proceedings Division 15 16 For Staff: Todd Gilman Taxpayer Rights Advocate 17 18 19 ---oOo--- 20 21 22 23 24 25 26 27 28 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 NOVEMBER 17, 2015 4 ---oOo--- 5 MR. HORTON: Ms. Richmond, what is our 6 first matter for the day? 7 MS. RICHMOND: Good morning, Chairman and 8 Board Members. 9 Our first item on today's agenda is the 10 Customer Service and Administrative Efficiency 11 Committee. Mr. Runner is the Chair of that 12 committee. 13 Mr. Runner. 14 MR. RUNNER: Thank you. We'll call the 15 committee to order. 16 We have before us the question of adopting 17 a policy restricting mail, mass mailings on behalf 18 of Board Members within a specified period prior to 19 an election. 20 I think Mr. Todd Gilman is prepared to make 21 a presentation. 22 MR. GILMAN: Yes, sir. Good morning, 23 Committee Chair Runner and Members. Todd Gilman, 24 Taxpayers' Rights Advocate, BOE. 25 For discussion by the committee this 26 morning is whether the Board should adopt a policy 27 that restricts mass mailing on behalf of a Board 28 Member within a specified time period prior to an 3 1 election. 2 For your consideration are two options: 3 Option 1, Board Members will continue to 4 abide by all state laws and regulations regarding 5 mass mailings without adopting additional policies; 6 Or Option 2, adopt the policy that 7 restricts mail sent by Board Members in advance of a 8 primary or general election. This would ban Board 9 Members and Agency staff from mailing or personally 10 delivering any document on behalf of any Board 11 Member to a person's residence, place of employment, 12 business or post office box within 60 days of an 13 election in which a Board Member is a candidate for 14 elected office. 15 However, there are exceptions as noted in 16 the attached discussion paper. 17 MR. RUNNER: Thank you. 18 I'm going to call on Chairman Horton. This 19 was a proposal that he -- that he prepared. And 20 actually within the -- within the letter that he 21 wrote about this issue, he articulated, I think, a 22 pretty complete list of -- of exceptions to that 23 process. 24 So I'll just see if there's some comments 25 from Mr. Horton on this. 26 MR. HORTON: Thank you, Chairman. 27 Members, just from a -- an overview, I 28 guess, you know, the Board of Equalization is 4 1 probably -- is one of the largest State agencies in 2 the world and unique in a number of different ways. 3 We administer over $60 billion in revenue. 4 And so, relative to our outreach efforts, I 5 think they are nominal. You know, the Board of 6 Equalization sees -- has taken a position over the 7 past that our best enforcement tool is actually 8 education. The greater the education efforts, the 9 greater the self-compliance with the law. And we're 10 fortunate that 98 percent of California taxpayers 11 actually comply with the law. That's not taking 12 into account the 9 -- $9 billion that goes 13 uncollected as a result of the underground economy. 14 So let me just set that as a premise, that 15 relative to the -- from my perspective, the expenses 16 involved in outreach, it is nominal. It's less than 17 what a corporation will pay for a commercial or two. 18 But yet, still, it is extremely effective. 19 The initiative before you, from historical 20 perspective, sort of the catalyst of it was the 21 California State Legislature, as well as activity 22 during the 2014 where candidates that, you know, 23 opposed Members, incumbent Members, expressed 24 concerns about our ability to do our jobs, 25 basically, and that's to communicate with California 26 taxpayers the law, the activities, and so forth. 27 So, the Legislature called into question 28 our outreach. And, at the time, it required quite a 5 1 bit of explaining on our part. And so, from my 2 perspective, I thought it just wise that we adopt 3 policies that is adopted by the federal government 4 and the State Legislature, as well as many other 5 legislative bodies, just to avoid the appearance. 6 But let me reiterate, from my perspective, 7 the Board of Equalization is quite different than 8 the Legislature. We are an administrative body that 9 has administrative functions and duties and 10 responsibilities to communicate to our constituents. 11 It is how the communication is accomplished that I 12 think may be somewhat of a concern of the 13 Legislature's as well as others have expressed 14 during that period of time. 15 What this initiative or this measure does, 16 it conforms with what the State Legislature says, is 17 that they have placed the restriction on themselves 18 not to mail out any mail that is not relative to the 19 Legislature total responsibility during the election 20 cycle. I think it's for 60 days, if I'm not 21 mistaken. 22 The Federal Government, Congress and so 23 forth, limit themselves for 90 days or somewhere 24 thereabouts. This does the same; it seeks to at the 25 same time protect the -- the responsibility or 26 ensure that the Board is living up to its fiduciary 27 responsibility to educate and communicate to its 28 constituents to say that when that occurred, that 6 1 the agency continues to mail, continues to -- to -- 2 to inform and to educate. It's just the mailing by 3 the individual Members that would be restricted. 4 Mr. Runner and I placed a restriction on 5 ourselves during the period of time once it was 6 brought to our attention that there was a concern, 7 in the abundance of caution from my perspective to 8 avoid any perception that there might be any 9 imbalance in the election process as a result of our 10 mailing activity. 11 MR. RUNNER: Okay. Other Members 12 discussion, questions? 13 Member Ma. 14 MS. MA: Yes. Thank you, Chairman Horton, 15 for bringing this up. And the only thing that I 16 would say is I would take out "in which a BOE Member 17 is a candidate for elected office" because obviously 18 it may not apply to the outgoing Members. For 19 example, you and Mr. Runner are not on the ballot 20 next time, but then Ms. Harkey and I will be on the 21 ballot. 22 And so I think just to be fair and, you 23 know, adhere to what I think is the intent of your 24 proposal, is that just no Member, within 60 days, 25 whether you're on the ballot or not, just nobody 26 mails to anybody. And then I think that just keeps 27 everything -- 28 MR. RUNNER: Mm-hmm. 7 1 MS. MA: -- you know, clean and clear, and 2 we all have the same rules whether we're on the 3 ballot or not. 4 MR. RUNNER: Mm-hmm. 5 MR. HORTON: I agree. 6 MR. RUNNER: Mm-hmm. 7 MR. HORTON: And I think it -- Member Ma, I 8 think that addresses another legal issue as well 9 because it maintains a certain cont- -- continuity 10 in the message. That the message that -- would not 11 want a situation where one Member is communicating 12 to a group of constituencies and the other 13 constituents don't have the benefit of that 14 information. 15 So I -- 16 MR. RUNNER: Okay. 17 MR. HORTON: I concur with that. 18 Mr. RUNNER: Thank you. 19 Okay, other -- Member Harkey. 20 MS. HARKEY: Okay, we -- this is my first 21 year and we've had a number of outreach activities. 22 How would this affect our ability to communicate? 23 Like, we just had a huge Connecting Women to Power, 24 which went extremely well. People stayed all day. 25 They were ecstatic with the information they 26 received. 27 MR. HORTON: Mr. Runner. 28 MR. RUNNER: Yeah, I was going to say, my 8 1 review of the proposal indicates that this would -- 2 that at regular -- regularly scheduled educational 3 communications would not be affected by this. 4 Therefore -- 5 I was concerned about that too, that all of 6 a sudden you -- we'd end up with a -- in our 7 intention to have this kind of blackout to 8 communicate, we'd also be doing a blackout of 9 communicating and educating. 10 My understanding of this is that those 11 would be exempt from this particular issue. 12 MR. HORTON: Mm-hmm. 13 MR. RUNNER: And that we're really -- 14 really talking about unsolicited direct mail. 15 I'll let the Chairman respond. 16 MR. HORTON: I concur with Mr. Runner as 17 articulated and want to reinforce that the 18 administrative functions of the Board of 19 Equalization in reaching out to their constituencies 20 directly in an educational form, should not be 21 restrictive. Ours is a little unique from the 22 Legislature, and so that is exempt from the blackout 23 and believe that it's appropriately so. 24 MR. RUNNER: Okay. Other questions? 25 Yes. 26 MS. STOWERS: Yes. So you're saying 27 education is not exempt. So like a small business 28 seminar would not be exempt from the blackout? 9 1 MR. RUNNER: Would be -- would be exempt. 2 MS. STOWERS: It would be or -- 3 MR. HORTON: It would be. 4 MS. MA: Yeah. 5 MS. STOWERS: It would be exempt. 6 MR. RUNNER: It would be, yes. 7 MS. STOWERS: And if the agency is 8 sponsoring a small business seminar and it's within 9 a Member's district that's running for an office, 10 his or her name will still be on that publication. 11 MR. RUNNER: Yes. 12 MR. GILMAN: Yes. 13 MS. STOWERS: And will it include all other 14 Members' names as well because it's an 15 agency-sponsored event? 16 MR. HORTON: Yes. 17 MR. RUNNER: If it was an agency-sponsored 18 event, that would be correct. 19 MR. GILMAN: It'd have to. 20 MS. STOWERS: Okay. Thank you. 21 MR. RUNNER: Okay. Any other questions? 22 MS. HARKEY: Now, you -- you -- you cut 23 yours off at 30 days, as I recall. 24 MR. RUNNER: In the last election cycle, I 25 chose and I think -- I did and the Chair said that 26 he did also at 30 days prior to the election, yes. 27 MS. HARKEY: And so our reason for 60 is 28 because of -- I just haven't seen this in the 10 1 full -- in full action, so I just want to be sure 2 I'm not doing something. Because one thing I found 3 about transparency, usually people passing 4 transparency are the least transparent. So I want 5 to be sure I'm totally transparent here in what I'm 6 trying to do. 7 We want to restrict the campaign mailings 8 or campaign purpose mailings which is what -- what 9 we were accused of. And we're trying to restrict 10 it -- we're -- we're going to restrict it to 11 strictly just Board business, of which we would be 12 able to send out any time we had a meeting. And, 13 uh -- and the Member's name would still be on it 14 because the Member's district. 15 MR. RUNNER: Yeah. Right. 16 MS. HARKEY: But the Member's name would be 17 on with all other Members, the same way, the same 18 how? I mean -- 19 MR. RUNNER: It -- 20 MS. HARKEY: What do we do? 21 MR. RUNNER: -- basically does not change, 22 is my understanding, it does not change anything 23 that would be scheduled right now, as we schedule 24 right now. A business education seminar would not 25 be affected by this. 26 Again, I -- to me, I think the simplest way 27 that I understand this, and I'll let Member Horton 28 kind of respond to what -- if this is -- if it's 11 1 broader than this, is there's a -- there are some 2 direct mail that we do that is unsolicited to inform 3 taxpayers of -- of issues, whether it's a veterans 4 mail piece or a -- or other things. 5 MR. GILMAN: Senior citizen. 6 MR. RUNNER: Senior citizen mail -- 7 MR. GILMAN: Right. 8 MR. RUNNER: -- piece that we do to educate 9 them. 10 MS. HARKEY: So it would not be allowed. 11 MR. RUNNER: That would be the -- that 12 would be kind of the target mail that we would be 13 referring to here. Because that would be, in my 14 opinion, not interrupting the important education 15 responsibilities that we have as a Board. It just 16 puts on pause the direct mail discussion -- 17 discussions that we often have with -- with, uh -- 18 MR. HORTON: Constituents. 19 MR. RUNNER: -- with the taxpayers and 20 constituents. 21 Is that fair summary, Mr. Chair? 22 MR. HORTON: It is. 23 MR. RUNNER: Okay. 24 MS. HARKEY: Okay. 25 MR. RUNNER: Okay. 26 MS. HARKEY: I just want to be sure I'm 27 totally clear as to what we're doing here. And 28 would this -- would this impact like next year none 12 1 of us are up for election, but we would not be able 2 to mail during the primary period next year, in 3 2016; is that true? And then the general, too? 4 Does it apply even if we're not for election? How 5 do we change this? 6 MR. RUNNER: Actually that's an interesting 7 thing you brought up because I think if we -- Member 8 Ma brought up a good point that when this applies, 9 it should apply to everybody. But at the same time, 10 there's an election cycle next year that none of us 11 are on the ballot for. 12 MS. HARKEY: Yeah, and I would prefer -- 13 MS. MA: Every four years. 14 MR. RUNNER: Right. 15 MS. HARKEY: -- not to be restricted unless 16 I'm on the ballot. 17 MR. RUNNER: So -- 18 MS. HARKEY: So -- 19 MR. RUNNER: So I guess we need to think of 20 a way to clarify that because I think if we just -- 21 MR. HORTON: Mr. Chair, if I may. 22 MR. RUNNER: Yeah, go ahead. 23 MR. HORTON: I think the -- the language in 24 the initiative refers to when there is an election 25 that we're involved with. 26 MR. RUNNER: Okay. 27 MR. HORTON: And it further restricts the 28 candidates that are not -- as a result of Member 13 1 Ma's amendment, that are not involved -- 2 MR. RUNNER: Okay. 3 MR. HORTON: -- in the election. 4 MR. RUNNER: So to clarify it, it's really 5 the election cycles to which there is a Board -- 6 Board of Equalization election. 7 MR. HORTON: Election. 8 MR. RUNNER: Okay. 9 MR. HORTON: And -- and the -- and it's 10 consistent with what the -- what Congress and what 11 the Legislature does. It, uh -- they, uh -- they 12 don't -- I mean Senate, for example, which is -- the 13 Assembly is kind of the catch-22 as we all remember; 14 we're up for election every election cycle in the 15 Assembly. But in the Senate, they're only up every 16 four years. And the same thing would hold to 17 Congress, so -- 18 MR. RUNNER: Let me ask, Mr. -- 19 MR. HORTON: -- Gilman. 20 MR. RUNNER: -- Gilman there, do you 21 understand the nuances to which we want to include 22 and make clear in that? 23 MR. GILMAN: I believe so. So for -- if -- 24 if the Board Member is running for election, then 25 they would be able to -- 26 MS. HARKEY: If a Board -- not the Board 27 Member. But if the Board, if any Member of the 28 Board is up for election -- 14 1 MR. GILMAN: Okay. 2 MR. RUNNER: Then all Members would not -- 3 MS. HARKEY: All Members. 4 MR. RUNNER: -- be able to -- 5 MR. GILMAN: Okay. 6 MR. RUNNER: -- the restriction would 7 apply -- 8 MS. HARKEY: Which begs -- 9 MR. RUNNER: -- whether they're on the 10 ballot or not on the ballot. 11 MR. GILMAN: Okay. 12 MS. HARKEY: Which begs the question, what 13 about a special election? If one of us were to 14 leave, decide we wanted to take off after a couple 15 years and pursue something else and there were a 16 special, are we included in that? 17 You know, I mean, I think -- I think we 18 need to think this out and be sure we've got it 19 nailed down. I don't think it's solid yet. 20 I -- I want to go along with it. I just 21 want to be sure there's no surprises in it. And 22 those are my -- those are my issues. Do we want to 23 do special -- 24 I mean we can talk about it up here. 25 MR. HORTON: Well, let's talk about it. I 26 mean a special election, I think, would fall in the 27 same category. 28 MR. RUNNER: Well, hold on. Do we -- we -- 15 1 we don't -- we don't participate in special 2 elections, do we? 3 MS. HARKEY: Well, are they appointed? 4 MR. RUNNER: Yeah. We don't have a special 5 election. 6 MS. HARKEY: That's right. We wouldn't 7 have a special election. 8 MR. RUNNER: Right. 9 MS. HARKEY: We'd have an appointment. 10 MR. RUNNER: Right. It's either -- you're 11 either -- either -- either the -- either the 12 Legislature and the Governor act or they -- or they 13 don't act and then the Chief Deputy fills the rest 14 of the term. 15 MS. HARKEY: Okay. 16 MR. RUNNER: So I don't -- there's no -- 17 there's no -- 18 MR. HORTON: -- special. 19 MR. RUNNER: -- special election activity 20 that refers -- that deals with us. Like -- as with 21 all the constitutional officers. 22 MS. HARKEY: Okay. 23 MR. HORTON: But the generic term 24 "election" will cover any election. So I think 25 we're covered -- 26 MR. RUNNER: Yeah. 27 MR. HORTON: -- if we just -- 28 MS. HARKEY: Okay. 16 1 MR. HORTON: -- do that. 2 MR. RUNNER: Okay. So I'm looking for a 3 motion. 4 MR. HORTON: Move adoption as amended by 5 Member Ma. 6 MR. RUNNER: Okay. 7 MR. HORTON: And the -- 8 MR. RUNNER: Okay. 9 MR. HORTON: Yeah. 10 MR. RUNNER: Is there a second? 11 MS. MA: Second. 12 MR. RUNNER: Okay. Without -- 13 Objection? 14 So be it, passed unanimous. 15 MR. GILMAN: Thank you, sir. BOE staff and 16 I will work with you, Committee Chair Runner, and 17 the rest of the Board Members' staff to capture the 18 direction of the Board. 19 MR. RUNNER: Thank you, Mr. Gilman. 20 MR. GILMAN: Thank you. 21 MR. RUNNER: And that ends our committee. 22 MR. HORTON: Thank you, Mr. Chair. Much 23 appreciated. Thank you, Members, for your support 24 of that initiative. 25 ---oOo--- 26 27 28 17 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 state 9 that I transcribed from recorded audio, to the best 10 of my ability, the proceedings in the above-entitled 11 hearing; and that the preceding pages 1 through 17 12 constitute my transcription of the proceedings. 13 14 Dated: January 19, 2016 15 16 17 ____________________________ 18 Kathleen Skidgel, CSR #9039 19 Hearing Reporter 20 21 22 23 24 25 26 27 28 18