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In massive shake-up, Gov. Jerry Brown breaks up California's scandal-plagued tax collection agency

In a move that triggers the most dramatic shake-up of the California Board of Equalization in its 138-year history, Gov. Jerry Brown signed legislation Tuesday that strips the embattled state tax collection agency of most of its powers and duties as officials scramble to create an entirely new department by July 1.

The board is the target of an investigation by the state Department of Justice, and its employees and members have been accused by auditors of mismanagement, including putting $350 million in sales taxes in the wrong accounts and improperly interfering with decisions to open field offices and transfer staff.

The governor signed a bill that pares the state board from an agency with 4,800 workers to one of 400 employees, shifting the other staff engaged in the collection of sales and excise taxes to a new California Department of Tax and Fee Administration.

The elected, five-member Board of Equalization will also give up its role hearing taxpayer appeals to a new Office of Tax Appeals, leaving the board to advocate for taxpayers and continue setting rates for gas taxes and pipeline levies, and making sure counties fairly assess property taxes.

Anticipating the governor’s action, officials had already started work to create a new state department by July 1.

“It’s a short period,” acknowledged Marybel Batjer, secretary of the California Government Operations Agency, who is coordinating the changes.

The new department will be headed by a director appointed by the governor and requiring state Senate approval. Brown will also appoint a chief deputy and chief counsel.

“The recruitment is underway” for those positions, Batjer said, adding that “the transition will continue after July 1, obviously. Not every 'i' will be dotted and 't' crossed between now and July 1. We will do our mighty best to do the most important things before July 1.”

Learn more on the history of the state board and what's next. 

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