THE LEONARD LETTER
A weekly electronic newsletter from
Bill Leonard, Member
State Board of Equalization
October 20, 2003

"The man who reads nothing at all is better educated than the man who reads nothing but newspapers." Thomas Jefferson (1743-1826)

UNDER THE DOME

***Viva La Difference...***

Over the last couple weeks, I have spoken with at least a dozen reporters about the Governor-elect, but it was not until late last week that a reporter from the Stockton Record asked the most relevant question: For legislators, how big a difference does it make to have a Governor from the same party? My answer is that it is bigger than the difference between night and day. Here is one example: When I was first elected to the Assembly, Jerry Brown was Governor. When he released his Budget, I had to read the newspaper like everyone else to learn what was in it. A few years later when I was Assembly Republican fiscal lead and Deukmejian was Governor, I participated in the discussions to write the Governor's Budget.

Moreover, with both Deukmejian and Wilson, there was a tacit understanding that legislation needed significant Republican support or would almost certainly suffer the fate of being vetoed. Although in the minority, we Republicans could often get the Democrats to significantly improve legislation because of our confidence -- and their fear -- that our Republican governors would back us up and deliver a veto if the other side did not negotiate in good faith.

Lastly, I believe very strongly that had there been a Republican Governor these last five years, despite the large Democrat majority in both houses, not a single one of the myriad of job-killing laws that are strangling our economy would have been signed into law. With this new Governor, I am confident that the voices of reason and moderation will no longer be cries from the wilderness.

***...And Maybe Just In TIme***

Professor Richard Vetter of Ohio University was in California recently. His research about the negative effects of tax increases on the economy is legendary. He made the point that the out-migration of Californians is a reliable indicator of bad times. People move out of the state because they have hopes for a better life elsewhere. Vetter presented the statistic that California lost more people during the last decade than escaped East Germany in the decade before the Berlin Wall went up! Its time for California leaders to wake up that their negative policies hurt.

IN THE BOARD ROOM

***Power Grab***

Constitutional governments are based on an intriguing proposition. The idea is that the government leaders will limit themselves to actions authorized by the Constitution. This means that if the government tries to limit free speech and the Constitution protects free speech then the Courts have the duty to tell the government , "No." This concept of limited government is tested regularly. The Board of Equalization now is engaged in this extra-constitutional behavior. The staff of the Board's Legal Department has advised the Board that we have the power to assess property taxes on non-utility or merchant power generators. The problem is that we do not have any such power. My colleague Carol Migden recognized this last year when, while serving as an Assemblymember, she authored legislation requiring the Board to tax these property owners. If the Board already had such power, her law would not have been needed. Yet the Board legal staff has ignored her new law (probably because it is also being challenged as unconstitutional) in favor of claims that the Board has the inherent authority to tell county assessors not to assess certain property. They believe the Board of Equalization can do it better than the counties would. This is an insult to elected county assessors, and it is a governmental power grab (no pun intended) by the BOE sanctioned by legal gymnastics.

***OAL's Blown Call***

BOE legal staff is not the only batch of government bureaucrats making really bad calls these days.

This summer the Board approved new property tax rules that will allow domestic partners to an exemption from reassessment upon the death of one or the other partner. This is a benefit that was previously enjoyed only by married Californians under the Constitution. I am in favor of giving greater tax relief to all Californians, regardless of what kind of relationship they are in, but I was first elected to the Legislature in 1978 as a supporter and defender of Proposition 13, from which the spousal exemption originates. I maintain that the Board of Equalization does not have the power to ignore the Constitution of California.

After the Board approved the new rule over my objection, the rule was sent to the Office of Administrative Law (OAL) for confirmation. I asked them to deny approval of the regulation and submitted legal arguments including an opinion of the Legislative Counsel showing that there was no authority for the regulation. Last Wednesday, I received the stunning news that OAL approved the rule. As far as I can tell, their only reason is that AB 205, the domestic partner bill recently signed by the Governor, in their eyes has greater authority than the state Constitution.

The Office of Administrative Law has disgraced itself by this ruling and there is no provision for reconsideration. Therefore, I am going to ask the Governor-elect to find attorneys who take the Constitution seriously to head up this agency and I will work with pro-family groups to protect the Constitution.

***The Ninth Commandment***

My primary role as a member of the Board of Equalization is to make sure that taxpayers are treated right by the tax bureaucrats who are trying to separate them from their hard-earned money. As such, I make every effort to see the taxpayers' point of view and give them the benefit of the doubt in presenting their case. Most of the time that pays off, but in two recent situations, the taxpayers have let me down.

First was a person who believed he had been wrongly denied his homeowner' s/renter's assistance claim. Now, such appeals tend to be routine items at most Board of Equalization Meetings, and the usual outcome is support of the staff recommendation. In fact, to hear an appeal on the merits I have to request that an item be set aside for a hearing at a future meeting. In this particular case, I was so compelled by an appellant's tale of disability and incapacity that I requested the case be pulled for future review. Board of Equalization and Franchise Tax Board staff had recommended denial of the claim, but based on what I read, I believed that further review and perhaps a little more information from the appellant would justify granting the requested assistance. However, the additional review exposed that the appellant's tale of hardship and disability was pure fabrication. Subsequent investigation revealed that not only had the appellant committed perjury but also that the case was part of an organized ring that was systematically filing false claims for government assistance. The Los Angeles County District Attorney's office now is considering filing charges against 18 people who filed false tax assistance claims.

In another case, an appellant, in an attempt to obtain a majority of the Board's support, misrepresented one Board member's position to another Board member---apparently believing there would no communication that would make this apparent. The result was a loss of the appellant's credibility.

I sit on the Board as a friend to the taxpayer, but I am disappointed with those who refuse to approach their tax dealings honestly or with integrity.

MISCELLANY

***Three More Words to Know***

Each week, the Leonard Letter features a few of the words from a list of 100 words that some educators say every high school student should know. The full list may be viewed at http://www.houghtonmifflinbooks.com/booksellers/press_release/100words/.

58. Nonsectarian (adj) Not limited to or associated with a particular religious denomination: Arnold Schwarzennger's transition team is politically nonsectarian, pulling from the left, right and center of California politics.

59. Notarize (tr. v.) To certify or attest to (the validity of a signature on a document, for example) as a notary public: The Secretary of State has until November 15 to notarize the recall vote and make it official.

60. Obsequious (adj) Full of or exhibiting servile compliance; fawning: Governor-elect Schwarzenegger has an advantage over other newly elected officials in that he is familiar with many people's obsequious behavior around famous, powerful people and, therefore, less likely to succumb to it.

BOE AND LEGISLATIVE DATES

November 15 --- Statement of the Vote --- The last day for the Secretary of State to prepare, certify, and file a statement of the Vote.

November 18 & 19 --- BoE meets in Sacramento.

December 4 --- BoE meets in Sacramento.

January 5, 2004 --- Legislature reconvenes.

NOTABLE DATES/ HISTORY

October 20, 1803 --- U.S. Senate ratifies the Louisiana Purchase

October 20, 1818 --- 49th parallel established as the border between U.S. & Canada

October 21, 1879 --- Thomas Edison perfects the carbonized cotton filament light bulb

October 22, 1938 --- First Xerox copy made

October 23, 1861 --- First transcontinental telegram sent ending the Pony Express

October 23, 1940 --- 40-hour work week goes into effect (Fair Labor Standards of 1938)

October 24, 1764 --- John Adams marries Abigail Smith (marriage lasts 54 years)

October 24, 1983 --- U.S. invades Grenada

October 25, 1774 --- 1st Continental Congress adjourns in Philadelphia

GENERAL TAX INFORMATION

For answers to your general tax questions, call the Board of Equalization information center. Customer service representatives are available to help you from 8:00 a.m. to 5:00 p.m. Pacific time, Monday through Friday (except state holidays).

Toll-free number: 800-400-7115

TDD service for the hearing impaired
TDD phones: 800-735-2929
Voice phones: 800-735-2922

HOW TO CONTACT ME

Bill Leonard
Board of Equalization
450 N Street, MIC: 78
Suite 2337
Sacramento, CA 95814
Telephone: (916) 445-2181
Fax: (916) 327-4003

 Email to: Bill.Leonard@boe.ca.gov