Annual Report 2011-2012
California’s State Board of Equalization (BOE) collects taxes and fees that provide approximately 33 percent of the annual revenue for state government and essential funding for counties, cities, and special districts. In fiscal year 2011-12, the BOE-administered taxes and fees produced $52.5 billion for education, public safety, transportation, housing, health services, social services, and natural resource management.
The BOE administers the state's sales and use, fuel, alcohol, tobacco, and other taxes and collects fees that fund specific state programs. More than one million businesses are registered with the agency.
In addition to administering key revenue programs, the BOE plays a significant role in California property tax assessment and administration. It also acts as the appellate body for corporate franchise and personal income tax appeals.
In 1879, a constitutional amendment created the BOE and charged it with the responsibility for ensuring statewide equality and uniformity in county property tax assessment practices. As the state's need for revenues to support programs, infrastructure, and services grew, the agency assumed a broader role.
In 1911, a voter-approved constitutional amendment directed the BOE to levy four new taxes, including insurance and corporate franchise taxes. In 1933, the Great Depression caused a tremendous drop in property tax revenues, which in turn led to the most significant change in the BOE's duties—the creation of the sales tax. Shortly afterward, in 1935, the use tax was established to protect California businesses from tax-free, out-of-state competition. Since that time, the BOE has been given the responsibility for administering a number of additional business and property taxes and fees. More details of the BOE history are found in the Appendix.
Tax and Fee Programs: 2011-12
Sales and Use Tax Programs
- Statewide Sales and Use Tax
- Bradley-Burns Uniform Local Sales and Use Tax
- District Transactions (Sales) and Use Tax
Special Tax and Fee Programs
- Aircraft Jet Fuel Tax
- Alcoholic Beverage Tax
- California Tire Fee
- Childhood Lead Poisoning Prevention Fee
- Cigarette and Tobacco Products Licensing Program
- Cigarette and Tobacco Products Tax
- Diesel Fuel Tax
- Electronic Waste Recycling Fee
- Emergency Telephone Users Surcharge
- Energy Resources Surcharge
- Fire Prevention Fee
- Hazardous Substance Tax Law
- Activity Fee
- Disposal Fee
- Environmental Fee
- Facility Fee
- Generator Fee
- Insurance Tax
- Integrated Waste Management Fee
- Marine Invasive Species Fee
- Motor Vehicle Fuel Tax
- Natural Gas Surcharge
- Occupational Lead Poisoning Prevention Fee
- Oil Spill Prevention and Administration Fee
- Oil Spill Response Fee
- Underground Storage Tank Maintenance Fee
- Water Rights Fee
Motor Carrier Office
- International Fuel Tax Agreement (IFTA)
- Interstate User Tax
- Use Fuel Tax
Property Tax Programs
- County Assessment Standards Program
- Private Railroad Car Tax
- State-Assessed Property Program
- Timber Yield Tax
Tax Appellate Programs
- Bank and Corporation Tax Law
- Personal Income Tax
- Homeowner and Renter Property Tax Assistance Law
- Publicly-Owned Property Assessment Review Program
- Taxpayers' Bill of Rights Law
Publication 41, Taxes and Fees Administered by the California State Board of Equalization, accompanies this report and lists revenues and other comparative information in a convenient chart format for revenue producing tax and fee programs administered by the BOE.
The BOE's five Board Members, who serve concurrent four-year terms, constitute the nation's only elected tax commission. One Member is elected from each of California's four Equalization Districts. The State Controller, elected at large, serves as the BOE's fifth Member. All of the 2011-12 Members of the Board were elected in November 2010, with terms beginning in January 2011.
The BOE's Executive Director, appointed by the Board Members, directs 4,495 agency employees, who carry out the BOE's mission, goals, and directives.
BOE Board Members (2011-12)
The primary responsibilities of the BOE are to:
- Administer agency programs.
- Act as an appellate body for the review of property, business, and income tax determinations.
- Adopt rules and regulations clarifying the laws it administers.
- Determine the assessed value of railroads and specified privately-held public utilities, including gas, electric, and telephone companies.
- Oversee the property tax assessment practices of county assessors.
In carrying out these responsibilities, the BOE:
- Serves as the appellate body for final actions taken by the Franchise Tax Board (FTB) involving the state's Bank and Corporation Franchise Tax, the Personal Income Tax, and the Homeowner and Renter Property Tax Assistance Laws.
- Prescribes the state's property tax rules and issues advice to guide property taxpayers, county assessors, and county assessment appeals boards.
- Considers appeals from taxpayers regarding sales and use taxes, excise taxes, fuel taxes and fees, environmental fees, insurance taxes, and state-assessed property values.
- Considers appeals from local governments of assessments made by county assessors on lands, water rights, and certain improvements on properties owned by the local governments but located outside their boundaries.
- Considers appeals from claimants of organizational clearance certificates for the welfare exemption.
- Develops and adopts capitalization rates to be used in valuing state-assessed utilities.
- Classifies unitary and nonunitary properties of public utilities and determines the property values of each assessee for local property taxation.
- Oversees revenue collection and program operations for fuel tax, excise tax, and environmental fee programs administered in cooperation with other state agencies.
- Fixes the 911 emergency telephone users surcharge rate determined by the California Department of General Services.
- Studies the operations of individual county assessor offices to determine their effectiveness.
- Prescribes property tax forms and publishes handbooks for county assessors' use.
- Publishes a Business Taxes Law Guide and advisory tax publications to help businesses comply with tax law requirements.
- Publishes a Property Taxes Law Guide and advisory tax publications for use by county officials and taxpayers.
Public Board meetings offer taxpayers and other interested parties the opportunity to participate in the formulation of rules and regulations adopted by the Board and to observe the Members as they carry out their official duties. Meetings are held throughout the year, usually two to three weeks apart. The Board meets monthly in Sacramento and as necessary, in other California cities. In 2011-12, the Board met in Sacramento and Culver City.
The Board also holds Taxpayers' Bill of Rights hearings each year that allow taxpayers to make comments and suggestions regarding BOE-administered laws and programs. For information regarding the 2011-12 hearings and related agency actions, please see the Meeting Taxpayer Needs chapter.
Betty T. Yee represents the First Equalization District and its 21 counties in northern and central California, including the entire San Francisco Bay Area. Ms. Yee has over 28 years of experience in public service, specializing in state and local finance. Ms. Yee previously served as Chief Deputy Director for Budget with the California Department of Finance where she led the development of the Governor's Budget, negotiations with the Legislature and key budget stakeholders, and fiscal analyses of legislation on behalf of the Administration.
Prior to this, she served in senior staff positions for several fiscal and policy committees in both houses of the California State Legislature. A native of San Francisco, Ms. Yee received her bachelor's degree in Sociology from the University of California, Berkeley, and her master's degree in Public Administration from Golden Gate University, San Francisco.
George Runner, elected in November 2010, represents the State Board of Equalization's Second District. He is a leading advocate for California taxpayers. During his time on the Board, Runner has worked to improve California's tax policies and practices. He led a successful effort to reform a controversial use tax collection program known as the Qualified Purchasers Program. He is an outspoken critic of the confusing and controversial Fire Prevention Fee. Prior to his election to the Board, Runner served twelve years in the State Legislature, authoring the well-known California Amber Alert and California's Blue Alert.
Runner and his wife, Senator Sharon Runner, are the first husband and wife in California history to have served concurrently in the Legislature. They are the authors of Jessica's Law, a ballot initiative approved by more than 70 percent of California voters in November 2006. Runner served on the Lancaster City Council, including two years as mayor. In 1976, the Runners founded Desert Christian Schools, which is now one of the largest private schools in California.
Michelle Steel, California's senior-ranking Republican constitutional officer, represents California's Third Equalization District. In just her first year on the job, Steel quickly distinguished herself as the state's leading tax fighter. In 2007, Steel discovered the BOE had delayed the return of millions of dollars in security deposits owed to California businesses. Procedures were changed due to Steel's decisive leadership.
Following her investigation, the tax agency refunded tax security deposits to over 5,500 small businesses. To date, over $100 million in security deposits have been returned to taxpayers. In 2008, Steel successfully led the fight against a new iTax, a $500 million tax on digital downloads. In 2010, Steel successfully championed legislation to protect taxpayers from excessive interest payments when they accidentally file taxes just one day late.
Steel's experience includes service on the President's Advisory Commission on Asian Americans and Pacific Islanders, the White House Conference on Aging, California's World Trade Commission, Los Angeles Department of Children and Family Services, and Los Angeles Airport and Fire Commissions.
Steel, a Pepperdine University business graduate, has an Executive MBA from the University of Southern California and lives in Surfside, California with her husband, Shawn.
Jerome E. Horton was overwhelmingly elected to the California State Board of Equalization on November 2, 2010, after being appointed to the Board by Governor Schwarzenegger and confirmed by the California State Legislature in 2009.
Since then, he has focused on several government efficiency initiatives designed to minimize the tax burden for California taxpayers and enhance the agency's ability to accelerate the resolution of disputes. Mr. Horton draws on 35 years of public service experience, which includes 21 years with the Board of Equalization, serving as the Legislative Director to Board Member Claude Parrish, and Business Tax Supervisor, District Reviewer, and Senior Auditor in the District Office. In addition, Mr. Horton served three terms in the State Assembly, and several terms on the Workforce Investment Board, Cultural Endowment Board, as a Medical Board Commissioner, and as a member of the Inglewood City Council. In private practice, Mr. Horton was a government relations consultant and served as a financial advisor and realtor. Chairman Horton is known as a visionary and pragmatic problem solver with a heart for California taxpayers. He received his B. S. Degree in Finance and Accounting from California State University, Dominguez Hills.
He is married to the Honorable Yvonne Horton, City Clerk of the City of Inglewood. Together, they have two children, Myeshia and Matthew, and one granddaughter, Sahara.
John Chiang, a Member of the Board since 1997, was elected to the position of State Controller in November 2006 and re-elected in 2010. As Controller, he continues to serve the Board as its fifth voting Member. John Chiang has long championed financial literacy, and uses his position to empower working families. Through seminars and free tax preparation assistance, Chiang educates low- and middle-income Californians about taking advantage of tax credits and refunds they have earned. Before serving as Controller, Chiang represented most of Los Angeles County on the Board.
First elected in 1998, then re-elected in 2002, he was recognized by many groups for outstanding public service at the BOE. He sponsored more successful legislative proposals during his tenure than any other Member in the BOE's 134-year history.
Now the state's Chief Fiscal Officer, Chiang chairs the Franchise Tax Board and serves on numerous other boards and commissions including the boards of the nation's two largest public pension funds. Chiang graduated with honors from the University of South Florida with a degree in Finance, and received his law degree from the Georgetown University Law Center.