1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 JANUARY 25, 2018 10 11 12 ITEM K 13 OTHER ADMINISTRATIVE MATTERS 14 K1 15 EXECUTIVE DIRECTOR'S REPORT 16 K1.1 17 ORGANIZATIONAL UPDATE 18 K1.2 19 BOARD MEETING DATE CHANGE 20 21 22 23 24 25 26 27 REPORTED BY: Jillian M. Sumner 28 CSR NO. 13619 1 1 P R E S E N T 2 3 For the Board Honorable George Runner Equalization: Vice Chair 4 Honorable Fiona Ma 5 CPA, Member 6 Honorable Jerome Horton Member 7 Yvette Stowers 8 Appearing for Betty T. Yee, State Controller 9 (per Government Code Section 7.9) 10 Joann Richmond 11 Chief Board Proceedings 12 Division 13 14 For Board of Equalization Staff: Dean Kinnee 15 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 JANUARY 25, 2018 4 ---oOo--- 5 MS. RICHMOND: Our next item is Item K, 6 Other Administrative Matters; K1 is the Executive 7 Director's Report; K1.1, Organizational Update. 8 MR. RUNNER: Thank you. 9 Mr. Kinnee. 10 MR. KINNEE: Thank you, Vice Chair Runner, 11 Members, Ms. Stowers. Dean Kinnee, Executive 12 Director. 13 Today I'll -- today I'll provide you with a 14 brief update of a couple of items. 15 In reference to our CEA positions that are 16 vacant, we're in the final stages of the Taxpayers' 17 Rights Advocate recruitment, pending final approval. 18 We've made an offer for the TRA position, and the 19 candidate has conditionally accepted. We hope to be 20 announcing our selection at the end of this week. I 21 was hopeful I would have it by today, but I will 22 probably have it by tomorrow. 23 In reference to the Chief Legislative 24 Research and Statistic's CEA, the position was posted 25 on January 12, 2018, and the final filing date is 26 February 1st. We hope to be completed with this 27 recruitment process by mid-March. 28 In regards to the Property Tax Program, last 3 1 month Mr. Gau informed you that we entered into 2 interagency agreements with CDTFA regarding the Legal 3 Entity Ownership Program, the Tax Area Services 4 Section and the Welfare Exemptions Program. 5 Effective February 1st, 2018, staff in these programs 6 will be returning to the BOE. 7 We're also getting back four attorneys that 8 formerly worked on property tax matters. So next 9 week we'll have those programs back. And I know 10 Mr. Nanjo is very thankful to the assistance we will 11 be having in our legal workload. 12 Regarding budgets, as a budget update, CDTFA 13 has informed us that at this time, monthly budget and 14 expenditure reports are not available. As a result 15 of the transition, the accounting and budget 16 processes and systems are being updated to handle 17 information for both BOE and CDTFA. 18 Following these updates, CDTFA plans to 19 conduct a reconciliation of all year-to-end 20 expenditures so accurate budget expenditure 21 information can be provided. 22 Unfortunately at this time, we don't have a 23 timeframe for when this work will be completed. But 24 we will send regular updates to your office to report 25 on CDTFA's progress. We understand the challenges 26 that is providing to your offices, and we apologize, 27 but we're working through it with CDTFA. 28 Regarding reinstatement rights, I know the 4 1 Board Members have a keen interest in this that we 2 return rights for your staff. I know Chief Deputy 3 Fleming has been in conversations with many of your 4 offices. 5 Ms. Fleming is working on -- with CDTFA to 6 finalize a memo that we'll be sending to your 7 offices. And once that memo is sent out, Ms. Fleming 8 and I will be happy to meet and discuss with any of 9 your offices that have questions. 10 On vacancies, we currently have almost 30 11 vacancies agency-wide. We're in the process of 12 identifying our current workload so that we can draft 13 duty statements reflecting the BOE's current 14 functions. This is one of our top priorities. We 15 will continue to pride you -- provide you with 16 updates and progress as we progress on this effort. 17 As far as facilities for the BOE, as you 18 know, AB 97 requires that all lease -- as leases 19 expire for Board Member's offices, the Board Members 20 are to be located in one state-owned facility. You 21 know we're working with CDTFA to identify potential 22 solutions for this office situation. We'll keep you 23 apprized of that. 24 I'll continue to work with CDTFA to work on 25 the transition things, you know. We'll work with 26 your office. If you have questions, we're happy to 27 work with you. 28 I thank you for your patience and input as I 5 1 assume the roles of Executive Director. I'll 2 continue to communicate key items to you by e-mails 3 and be happy to meet with you whenever, in addition 4 to updates I'll make at the Board Meetings. 5 And at this time, I'm happy to answer any 6 questions you may have. 7 MR. RUNNER: Okay. 8 Any questions? 9 Member Ma. 10 MS. MA: I just have a question. 11 When you say "the budgets," what budget are 12 we talking about? 13 MR. KINNEE: '17-'18. 14 MS. MA: For the whole agency? 15 MR. KINNEE: For the whole agency. 16 MS. MA: Okay. 17 MR. KINNEE: So I know -- and some -- we've 18 been contacted what you -- what budget you're offices 19 have, we still don't have that level of detail. And 20 we're working with CDTFA. 21 MS. MA: And so they're going to prepare the 22 budget, or how does this work? 23 MR. KINNEE: They're providing that service. 24 They're the ones working, you know -- splitting the 25 budgets between the two agencies, allocating and so 26 forth. 27 MR. RUNNER: This is about expenditures. 28 MR. KINNEE: Yes. 6 1 MR. RUNNER: Because this is the current 2 budget. 3 MR. KINNEE: Correct. 4 MR. RUNNER: So this is about tracking 5 current expenditures. 6 MR. KINNEE: Correct. 7 MR. RUNNER: So we have no ability right now 8 throughout our whole -- the whole agency to track 9 expenditures? 10 MR. KINNEE: I wish Ms. Fleming were here. 11 I think -- it's challenging, yes. We don't really 12 have a clear handle of where we stand. I mean, we -- 13 in a global -- you know, we kind of know what we've 14 spent. 15 MR. RUNNER: Right. Right. 16 MR. KINNEE: Personal service and stuff. 17 But for Board Member's offices, we don't have a 18 handle on -- 19 MR. RUNNER: Okay. 20 MR. KINNEE: -- your -- you know, we know 21 what you're spending, but we don't have a clear 22 handle on what we can tell you, and you have "X" 23 dollars left in your budget, which is very 24 challenging. 25 MR. RUNNER: And their -- and the response 26 back from them is they'll get back to us? 27 MR. KINNEE: Correct. And Ms. Fleming is 28 working on that and in constant contact with them. 7 1 MR. RUNNER: This is kind of the hitches 2 that I was talking about that are out there that are 3 just -- are a little hard. 4 MR. KINNEE: So I mean, we -- we appreciate 5 CDTFA's challenges, too. 6 MR. RUNNER: Yeah. 7 MR. KINNEE: They're dealing with the split 8 like us, and the same loss of delegation in certain 9 areas. So we appreciate their -- their 10 cooperation. 11 MR. RUNNER: On -- on one of the other 12 topics that you mentioned, and you and I had a brief 13 conversation yesterday about it, and that is the 14 proximity to staff. 15 One of the things that seems to me has not 16 been established, and that is where staff is going to 17 be located as we've created these new agencies and 18 departments. 19 So right now we have people in this 20 building, we have people over at the building where 21 the attorneys are, and we have building -- and we 22 have people out in the Natomas facility. Um, and, 23 you know -- and, again, I think all of our executives 24 are in this building. 25 MR. KINNEE: Correct. 26 MR. RUNNER: And all their workers are 27 somewhere else. It seems to me that that is just not 28 a good formula for an efficient agency. And, um, I 8 1 would think that one of the things that we ought to 2 help guide -- and I don't know whether this is both 3 to, you know, Governor's office, but also when we go 4 to testify at the Legislature this needs to be the 5 need for us to try to consolidate personnel to -- to 6 a space to where personnel then can communicate with 7 each other. People who have meetings can be -- go to 8 one place. 9 It's going to be another issue for Members, 10 not so much this year, but next year. Because as you 11 said, the law requires them to be located in a state 12 building. Well, it would make sense for them to be 13 located in a state building that's somewhere close to 14 where the BOE is. 15 So I think -- I -- I would hope that we 16 would probably maybe almost be proactive in coming up 17 with what we believe would make sense as a plan. 18 Because I don't know -- if we don't come up with it, 19 I'm not sure they will. 20 And -- I don't know. I don't know if it's 21 about trading space, you know, providing some of the 22 space that we have here and using some of the space 23 that, you know, other agencies have out in Natomas to 24 try to work it out. But I would hope there would be 25 a plan to kind of make sense out of a proximity of 26 employees. 27 MS. STOWERS: I agree. Yeah. 28 MR. KINNEE: We're looking at it. It's 9 1 another one of the many items on Ms. Fleming's plate, 2 and Mr. Nanjo is assisting. We're looking at it. It 3 has to be in a state facility. So the Board 4 Members -- 5 MR. RUNNER: Board Members, right. 6 MR. KINNEE: -- so staff is out. 7 MR. RUNNER: And my priority issue is 8 probably less for Board Members and more for staff to 9 be located in the right place to do their job. 10 MR. KINNEE: Right. I think, you know, with 11 Board Proceedings and Legal and the Executive Office 12 in one place would be -- 13 MR. RUNNER: Yeah. Because right now I 14 understand that Mr. Nanjo is here -- 15 MR. KINNEE: But his staff -- 16 MR. RUNNER: -- and his attorneys are all 17 over somewhere else. And I know we do a lot with 18 e-mail, and we do a lot with those kinds of things. 19 But oftentimes, you just need to walk down to 20 somebody's office and have a discussion. And so 21 proximity does become pretty important when it comes 22 to efficiency. 23 So I think -- I think -- I would hope we'd 24 all feel like that would make sense. 25 MS. STOWERS: I agree 100 percent that it 26 would be nice if we could all be in one building. 27 But if not, that the property tax staff and attorneys 28 are together. And then the Members and the Executive 10 1 team are together. 2 MR. RUNNER: Mm-hm. 3 MS. STOWERS: I'm not -- of course -- and 4 the Member's staff -- 5 MR. RUNNER: That are here. 6 MS. STOWERS: -- for the Sacramento offices, 7 for the Sacramento location should all be together. 8 MR. RUNNER: Yeah. 9 MR. HORTON: The condition of it being in a 10 state building may in and of itself be a little 11 challenging, especially given that the Board of 12 Equalization had outgrown this state building and 13 sought to have access to other state buildings in 14 order to actually relocate our staff over the last 15 five years within a state building. And not being 16 able to -- to do that for a number of reasons. 17 And so if I hear Mr. Runner correctly, 18 respectful of the staff limitations that we have, at 19 some point we need a proposal that deals with not 20 only the legal, legislative as well. Because the 21 restriction on the state building has certain 22 legislative concerns that -- that have to be 23 addressed. Because in order to locate and relocate, 24 you need to have -- to make sure that you meet the 25 provisions -- legislative provisions related to that. 26 So there's a lot of just fundamental thought 27 that has to be placed in this and has to be codified 28 and communicated. And some form of a document. And 11 1 I -- and, quite frankly, I don't know if CDTFA has 2 the capacity to do that either with that caveat as a 3 restriction. 4 Certainly I support the Member's perception 5 to the extent that it's cost-effective as well, not 6 to have the variable cost of having staff in various 7 different locations. 8 MR. RUNNER: Part of the irony of some of 9 the legislation was it was going to require some 10 state employees to move out of the building in order 11 to make room for -- for Board Members' staff to be in 12 the building. 13 So, yeah, there's a lot to do there. But I 14 think that nobody else is going to be looking out for 15 our interest in regards to staff proximity. And I 16 think it's going to be important for us to do that. 17 Okay. 18 MR. HORTON: Is that -- may I, Mr. Runner? 19 MR. RUNNER: Yes. 20 MR. HORTON: Is it possible to come up with 21 an analysis as to what it would take financially, 22 legislatively, practically? And being appreciative 23 of your staffing limitations or to request that legal 24 interpretation as to how we would accomplish that in 25 a fiscal or a analysis by D -- D -- DGS, something 26 like that, as to the availability of other state 27 facilities so that we can accomplish this objective 28 expeditiously hopefully? 12 1 MR. KINNEE: We're relying on Mr. Nanjo's 2 prior experience to help us. And we've been meeting. 3 MR. RUNNER: Okay. 4 MR. KINNEE: It is a top -- one of our many, 5 many top priorities. But we realize we need to pull 6 a plan together on this one. And we've been in 7 discussions. 8 MR. RUNNER: Okay. I think you have another 9 item. 10 MS. RICHMOND: Yes. Item K1.2, Board 11 Meeting Day Change. 12 MR. KINNEE: Vice Chair Runner, Members, 13 Ms. Stowers. Dean Kinnee, Executive Director. 14 With your approval, I recommend moving the 15 November Sacramento Board Meeting from Tuesday, 16 November 6th to Thursday, November 8th, due to the 17 general election being held on November 6th. 18 MR. HORTON: So moved. 19 MS. STOWERS: Second. 20 MR. RUNNER: Without objection? 21 Okay. 22 Ms. Richmond, next item. 23 ---oOo--- 24 25 26 27 28 13 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Jillian Sumner, Hearing Reporter for 8 the California State Board of Equalization certify 9 that on January 25, 2018 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 14 14 constitute a complete and accurate transcription of 15 the shorthand writing. 16 17 Dated: May 18, 2018 18 19 20 ____________________________ 21 JILLIAN SUMNER, CSR #13619 22 Hearing Reporter 23 24 25 26 27 28 14