1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 REPORTER'S TRANSCRIPT 8 JULY 26, 2011 9 10 ITEM M OTHER CHIEF COUNSEL MATTERS 11 M1 EDUCATIONAL OUTREACH EVENTS AND PARTNERSHIPS 12 13 14 15 16 17 18 19 20 Reported by: Juli Price Jackson 21 No. CSR 5214 22 23 24 25 26 27 28 1 1 P R E S E N T 2 3 For the Board Jerome E. Horton of Equalization: Chairman 4 5 Michelle Steel Vice-Chairwoman 6 7 Betty T. Yee Member 8 9 George Runner Member 10 11 Marcy Jo Mandel Appearing for John 12 Chiang, State Controller (per 13 Government Code Section 7.9) 14 15 Diane G. Olson Chief, Board 16 Proceedings Division 17 Anita Gore Deputy Director of 18 External Affairs 19 Deborah Cooke Legal Department 20 21 Kari Hammond Outreach Services 22 Division Manager 23 ---o0o--- 24 25 26 27 28 2 1 450 N STREET 2 CULVER CITY, CALIFORNIA 3 JULY 26, 2011 4 ---oOo--- 5 MR. HORTON: Ms. Olson? 6 MS. OLSON: Our next item is M1, Educational 7 Outreach Events and Partnerships. 8 MR. HORTON: Members, here to present on the 9 matter is Miss Deborah Cooke and Miss Anita Gore. 10 And I am presuming there are no witnesses? 11 And Miss Kari Hammond as well. 12 MS. GORE: Good afternoon, Chairman and 13 Members. I'm Anita Gore, Deputy Director of External 14 Affairs. 15 With me today is legal counsel Deborah Cooke 16 and Outreach Services Division Manager, Kari Hammond, 17 who is also here to answer questions. 18 The memo you have before you today finalizes 19 the draft memo presented by Miss Cooke in April. 20 Following the April Board meeting discussion of the 21 issues, staff was directed to look at best practices and 22 procedures currently followed at BOE and those 23 procedures and practices of other government agencies. 24 BOE best practices and procedures are based on 25 legal responses to questions and advice over time and 26 past experience. There are three basic types of 27 outreach events that BOE staff and Board Members support 28 and participate in -- BOE-sponsored, non BOE-sponsored 3 1 and BOE co-sponsored. 2 Established guidelines exist for BOE-sponsored 3 and non events and those guidelines are applied to 4 co-sponsored events as well. 5 As always, any event in which planning or 6 coordination by the External Affairs Department or 7 Outreach Services Division is provided, a governmental 8 purpose must be established. 9 On the issue of using logos of other agencies, 10 it has been External Affairs Department policy to avoid 11 use of for profit organizations logos on our materials 12 unless specifically requested. And then the decision is 13 made on case-by-case basis. 14 This consistent with best practices of other 15 agencies that treat use of logos on a case-by-case 16 basis. 17 Outreach Services Division contacted three 18 State agencies -- FTB, EDD and the Attorney General's 19 office -- and two federal agencies -- IRS and Small 20 Businesses Administration -- to inquire about their 21 outreach policies and procedures. 22 You have been given a chart with more 23 information, but for discussion purposes, I'll use only 24 a few samples. 25 Generally speaking, all California State 26 agencies contacted by Outreach did not have any written 27 policy restrictions in regard to participating in events 28 sponsored by for profit entities. All requests must be 4 1 for a governmental purpose and be related to the 2 business of the State agency participating. 3 In addition, California agencies Program and 4 Outreach Divisions review and approve most 5 co-sponsorship and event requests. 6 Questionable or potential conflict of interest 7 requests are sent to legal counsel for review and are 8 approved on a case-by-case basis. 9 Co-sponsorship and event requests include use 10 of the agency name and logo. 11 The federal US agencies, SBA and IRS, have 12 formal standard operating procedure manuals that the 13 outreach programs use as guidelines. The standard 14 operating procedures include information about approved 15 activities, approval process and co-sponsorships. 16 The Regional Outreach Divisions for the federal 17 agencies have the authority to use the manuals to 18 determine the appropriateness of their agency's 19 co-sponsorship or participation. 20 SBA does require a co-sponsorship to be 21 completed, a written agreement, signed by general 22 counsel. This does not include general participation as 23 a speaker or an exhibitor. 24 The agreement includes a detailed description 25 of the activity, scope and responsibilities, term, 26 relationship and budget and post event report, which 27 shows that the event zeroed out and there was no profit. 28 The SBA logo can be used on printed documents 5 1 to promote an approved co-sponsored activity, but can 2 not be used for general partnership purposes. 3 The IRS has a Taxpayer Education and Assistance 4 Outreach Standard Operating Procedures Manual that they 5 use as well as advice from legal counsel. 6 The Franchise Tax Board relies on advice from 7 general legal counsel on a case-by-case basis. 8 Consistent with other agencies' practices, like 9 those of IRS and Small Business Administration, the 10 External Affairs Department plans to build a web page 11 where our practices and procedures can be available for 12 staff and partners' convenience. 13 The web page would include guidelines for 14 outreach and education events, as well as speakers 15 bureau and other public presentations. 16 And I'm happy to answer any questions that you 17 may have. 18 MR. HORTON: Thank you very much. 19 Discussion, Members? 20 MS. MANDEL: Sure, Mr. Horton. 21 MR. HORTON: Ms. Mandel? 22 MS. MANDEL: The suggestion that we're getting 23 back from staff that we simply post on the public 24 website the existing general guidelines that we have -- 25 and I do appreciate that you gave me those, so, now I 26 have them -- though not yet access to eBoe -- some 27 day -- that really misses the point of what the 28 Controller's concern was. 6 1 It fails to address the fundamental question 2 and concern that was raised when we asked for guidelines 3 to be prepared, which was whether we should -- whether 4 the Board should jointly sponsor events with entities 5 that have business before the Board and the whole issue 6 of co-branding events with their corporate logos. 7 Again our -- the concern was with the potential 8 risk to the integrity of the BOE and public confidence 9 in our decision making. 10 And, so, we're disappointed that there's not 11 more to the guidelines that are being suggested. And we 12 would move that staff go back to the drawing board and 13 draft some real guidelines that address these concerns. 14 The BOE is a unique kind of organization with 15 unique business. 16 Thank you. 17 MR. HORTON: Further discussion -- further 18 discussion, Members? 19 Hearing none -- 20 MS. MANDEL: So, that would be my motion. And 21 I would ask if I have a second? 22 MS. YEE: I'll second the motion. 23 MR. HORTON: There is a motion on the table and 24 a second to direct staff, I believe, to go back and 25 develop guidelines, further guidelines. 26 Any discussion, Members? 27 MR. RUNNER: Yes. 28 MR. HORTON: Mr. Runner? 7 1 MR. RUNNER: Now that we've got a motion, I'm 2 actually quite fine right now with the idea of making a 3 better public statement and available statement in 4 regards to -- and publishing what our -- what our 5 practices and standards are. I think that's a good 6 place to start. 7 And I think that accomplishes what I think 8 seems to be consistent with what it is that many of the 9 other entities are, indeed, dealing with. 10 So, I'm -- I would not be supportive of having 11 staff come back with specific recommendations, but am 12 satisfied with us making sure that our public does 13 understand what it is that we have set up and what our 14 guidelines are. 15 MS. YEE: Mr. Chairman? 16 MR. HORTON: Member Yee? 17 MS. YEE: In response to Mr. Runner's comments, 18 I don't have any concern about proceeding to do that. 19 I would concur with Ms. Mandel's concern about 20 the original discussion and purpose of the Controller's 21 request. 22 I had expected that our guidelines would be 23 public and would be available for public perusal. But 24 it doesn't get to the initial inquiry made by the 25 Controller. 26 So, I do support Ms. Mandel's motion, but I 27 also support Mr. Runner's recommendation that what we 28 have here before us today ought to be out in the public 8 1 domain. 2 MS. MANDEL: Mr. Horton? 3 MR. HORTON: Yes, Ms. Mandel? 4 MS. MANDEL: And I would say, you know, if -- 5 if staff -- if staff has -- I don't know what the right 6 word is -- if staff has some difficulty in thinking 7 about how to draft those kinds of guidelines that we had 8 such extensive discussion on, certainly there are some 9 good government organizations out there that, you know, 10 might have useful points of contact. And we'd be happy 11 to facilitate that. 12 But we did ask staff to come back with some 13 meat and potatoes on the issue. 14 So, thank you. 15 MR. HORTON: Thank you. 16 Members, the Board of Equalization is kind of a 17 hybrid, if you will. We are the only elected tax 18 administrating agency, arguably, in the world, where you 19 have established policy makers who are in the position 20 of being elected officials receiving contributions and 21 participating in both capacities as administrator and in 22 a quasi-adjudication body. 23 And, therefore, it puts our staff at somewhat 24 of a disadvantage, in my mind, of developing policy that 25 is inherently our responsibility. 26 And, so, therein is the -- I can imagine it 27 would be a challenge for staff to position themselves to 28 formulate policy and then present it to the Board. 9 1 And in most situations of this nature that 2 would be considered almost inappropriate because staff's 3 presentation inadvertently would box the policy makers 4 in by simply saying, "Here's what staff believes the 5 policy should be," and, therefore, positioning the 6 policy makers to have to either accept or reject and 7 putting the policy makers in a positioning of delegating 8 our responsibility and authority to the administrative 9 body. 10 In that this is a discussion or matter in which 11 public discord or transparency is an issue that is 12 germane to what we do individually as elected officials' 13 representatives and that we've all articulated our 14 desire to have transparency to the greatest extent 15 possible and to develop a policy that minimizes or 16 retains the integrity of the operation. 17 Staff has brought back to us what similar 18 organizations have done or are currently doing and 19 present that -- presented that to us for our 20 consideration. 21 I would encourage this body to take the time to 22 consider what's out there and available and that we, as 23 a body, establish the policies as specific as we so 24 desire, as general as we so desire, and put forth those 25 policies for discussion and ultimate vote by this body. 26 It's inherently -- can be inherently 27 interesting, if you will, to delegate to staff the -- 28 that responsibility of formulating policy, even down to 10 1 the point of developing audit policy as it relates to 2 the agency as a whole. 3 We certainly rely on them for legal 4 administrative guidance and so forth. And I think 5 they've met that threshold of providing us information 6 as to what is the best practices out there by other 7 agencies. And we certainly have our own perspectives. 8 And when you get to -- you know, when you're 9 dealing with an issue of transparency, conflict of 10 interest, working or interacting with individuals who 11 will practice before the Board of Equalization, there 12 has been on -- debate for years about a quasi-judiciary 13 body accepting contributions to any degree. 14 Thus, the Kopp Act sought to sort of quantify 15 that and say that you cannot accept he contribution 16 greater than $250 from anyone that will appear before 17 the Board of Equalization within a year. And that was 18 established by the legislature because of their 19 concerns. 20 If this body has similar concerns, where 21 contributions -- either directly to the Members or via 22 their participation in the efforts of this organization 23 to educate the public about their responsibility or to 24 the extent that there is a commonality in purpose and 25 function of various foundations who seek to educate the 26 public in California -- I'm certainly prepared to deal 27 with those. In fact, I actually introduced legislation 28 to kind of take a look at and study whether or not this 11 1 quasi-judiciary body should be accepting contributions 2 at all. 3 Because it's a situation where the ship cannot 4 be halfway there, you know. And I don't want to use 5 this -- I will use it, but I will qualify it -- that, in 6 fact, I am going to use it in such a way that it will be 7 a little different. A man can't be half pregnant, he's 8 either pregnant or he's not. 9 MR. RUNNER: It's -- 10 MR. HORTON: Yeah, so, however this goes, at 11 any rate -- and I support our efforts to -- to minimize 12 the appearance, if you will, but for -- not for the 13 purpose of not communicating, sending the wrong message 14 to the people who practice before us that they have some 15 greater access, and to each of the elected officials who 16 have a concern, if that's their concern, they should 17 judge themselves and deal with these issues accordingly. 18 So, to wrap it up, I think that we should 19 probably, as a body, set aside some time soon and do our 20 own due diligence to see what type of policy we would 21 like to see and we would like to formulate -- 22 MS. MANDEL: Mr. Horton? 23 MR. HORTON: -- and then I'll be more than 24 willing to stop in a minute -- 25 MS. MANDEL: Should I time you? 26 MR. HORTON: No, but I appreciate it. 27 MS. MANDEL: Okay. 28 MR. HORTON: And then we can give some 12 1 direction to staff as to what we think the policy should 2 be. A general statement puts staff in a catch 22. 3 Ms. Mandel? 4 MS. MANDEL: That is -- okay. 5 Well, we -- as I said before and as I said last 6 time, we would like to see some guidelines drafted by 7 staff. 8 We have a, you know, intelligent, professional 9 staff with legal counsel. We did talk about how it 10 wasn't -- from our standpoint, it wasn't an issue of, 11 you know, just doing whatever the law will allow, but, 12 you know, something beyond that. 13 We're particularly concerned again with the 14 logos and the co-sponsorships and, you know, generally 15 we believe the answer would be no on those logos, due to 16 the risk to the public perception of the BOE. 17 We do have staff come to us on a lot of items 18 with policy recommendations, guidelines of various 19 kinds, and -- and sometimes they have, you know, 20 different options that go different ways. 21 But we would very much be appreciative of 22 seeing back what it was we asked for in the first 23 instance, which was guidelines, real guidelines, that 24 address these issues. 25 You know, Members don't always take the advice 26 of staff in the ultimate end result, so -- but we 27 would -- we are asking for the guidelines to be drafted, 28 as was my motion. 13 1 And I think I have a second. So, that's kind 2 of where I am. 3 Thank you. 4 MS. YEE: Mr. Chairman? 5 MR. HORTON: Member Yee? 6 MS. YEE: Thank you. 7 For all of the reasons you enumerated, 8 Mr. Chairman, I think this body is expected and has an 9 obligation to really act with higher standard than any 10 other governmental entity. 11 Yes, we are ultimately accountable to our 12 electorate. And we serve in a very serious function 13 here. 14 And because we are unusual with respect to our 15 elective nature and the types of activities that we do 16 engage in, I would like to see some strong guidelines. 17 I'm frustrated by this discussion, 1, that 18 we -- 1, that we're even having it, and, 2, there seems 19 to be no sense of ownership or seriousness about really 20 being clear about what our guidelines are in this 21 regard. 22 We are operating a very constrained fiscal 23 environment right now. We are continuing to pursue 24 outreach activities, which I think many of you here on 25 the dais with me agree has some -- continues to have 26 some public purpose and certainly public benefit. 27 But I think there have been questions that have 28 been raised -- and the staff is completely aware of what 14 1 they are -- that have come across certainly the 2 Executive Director's office, Legal Department. 3 This is not an assignment about trying to wrong 4 anybody, but it is something about bringing transparency 5 and just better clarity -- and as Ms. Mandel has 6 requested on behalf of the Controller -- guidelines that 7 we can adopt as a body that then becomes the 8 expectation, not only of us here on the dais, but of the 9 staff and, more importantly, the public and taxpayers. 10 And I don't want to skirt this issue too much 11 longer because we're going to be engaged in activities. 12 The fact that we have raised it, there will be attention 13 focused on it. 14 And if the staff is unclear about what is being 15 requested, I wish we would get questions about it. I 16 certainly have some thoughts about what those could look 17 like. I am sure Ms. Mandel does as well. 18 But I think we're shirking our responsibility 19 that is serious if we don't request that the staff come 20 back to us with specific guidelines to consider. 21 I appreciate the matrix and all the work that 22 went into the research, but it really did nothing for 23 me. This body is different. It is unique. We do have 24 interests that support us in terms of our service on 25 this Board. And we just need to know that that 26 expression of interest and support of us being here is 27 separate and apart from whatever other involvement we 28 may have in our capacity serving as Members on this 15 1 Board. 2 MS. MANDEL: So, anyway, we have -- 3 MR. HORTON: Miss Mandel? 4 MS. MANDEL: -- nothing further except that 5 we -- I have a motion and a second. 6 So -- 7 MR. HORTON: Further discussion? Further 8 discussion, Members? 9 Hearing none, I'm prepared to -- to -- to give 10 staff some direction and on what they should do or what 11 the policy should look like. 12 And it seems like others are prepared to give 13 staff some direction on what they perceive the policy 14 should look like. And that might be helpful to them if 15 we had that kind of discussion. 16 Skirting the issue, I'm prepared to have that 17 debate today and to give them that kind of direction 18 today. 19 Although, I mean, reflective of my legislative 20 agenda, I sought to eliminate ex parte communication, to 21 extend the Kopp Act beyond a year and make it four 22 years -- that you would only have that Kopp Act issue 23 the year of your election. 24 The position of partnering with a private 25 entity is addressed. I mean, I think our existing 26 policy addresses the -- it specifically says that the 27 Board does not partner with private entities. 28 Whether those private entities' logos should be 16 1 incorporated in a document that the Board of 2 Equalization prepares and set forth, I'm prepared to say 3 no, that shouldn't be the case. 4 If there is a nonprofit, certainly the 5 nonprofit can -- can develop a document that they want 6 to develop and include whoever they want to include. 7 Should we partner with agencies that don't have 8 a direct correlation? Recently I had an event with the 9 Los Angeles Bar Association. Mr. Chiang spoke and 10 participated. A number of others spoke and 11 participated. Arguably, their issues are not germane to 12 ours, they're certainly related, but they happen to have 13 similar constituencies and provided us an opportunity to 14 educate them about the Board of Equalization sales and 15 use tax law. 16 Our strategic planner said that we will seek 17 partnerships that allow us to advance the opportunities 18 to educate our constituencies. I'm prepared to go 19 there. 20 On transparency, I'm prepared to disclose to 21 the general public and let them make the decision. And 22 particularly since we are elected officials our public 23 should be aware of everything that we do. And to make 24 them aware of what these expenditures are because I 25 believe that they're defendable. 26 I mean, I believe that it is our inherent 27 responsibility to educate the public and to use the 28 resources necessary and that we have in order to 17 1 accomplish that goal and to protect the -- at the same 2 time, the balance and to protect the integrity of this 3 agency and to disclose it to the public and let the 4 public make the final decision about that, as long as we 5 are in compliance with the law and in compliance with 6 the policy established by this body. 7 I'm very submissive to what this body decides 8 to do and will submit to that as an elected 9 representative. 10 MS. MANDEL: Mr. -- 11 MR. HORTON: So -- 12 MS. MANDEL: -- Mr. Horton, Kopp Act, financial 13 conflicts, all those other things are -- you know, 14 that's something completely separate and apart from the 15 sort of outreach events and outreach partnerships. 16 You know, we're -- we believe very strongly in 17 outreach and taxpayer education. As we've spoken 18 before, the Controller has a long, long history of 19 supporting and advocating for outreach and taxpayer 20 education. 21 But, again, we're very concerned about logo -- 22 logo co-branding. We'd like to see some guidelines 23 drafted. 24 We offered to help facilitate with some good 25 government groups if -- you know, if staff has issues in 26 trying to -- I do think that from all the different 27 types of things that they may have seen over the years 28 and the types of things that they might think might come 18 1 up, that they would be able to come up with scenarios 2 where it would be advisable to do things one way or 3 another. 4 Again, we think that it is, at some level, 5 since they're telling us what's -- you know, that it may 6 be more than what -- the law is the sort of the lower -- 7 lower limit, we talked about that last time -- you know, 8 that some of the things that they might consider would 9 be whether there's a time limitation on things. 10 We have those kinds of things in other -- in 11 other areas, but, again, the motion is to ask staff 12 to -- to draft some guidelines for our consideration 13 that addresses these concerns. 14 And I'd like to see if we could get a vote on 15 that. 16 MR. HORTON: Umm -- 17 MR. RUNNER: Mr. Chair? 18 MR. HORTON: -- well, let me -- Mr. Runner, if 19 I may just -- 20 MR. RUNNER: Okay. 21 MR. HORTON: -- Members, we're -- this is a 22 real world that we live and deal in. 23 Conflict of interest is not restricted to this 24 issue. Integrity is not restricted to this issue and 25 this issue alone. It's a broader concern and a broader 26 issue. 27 And, so, if -- if we are specifically talking 28 about logos, then let's not have the Board of 19 1 Equalization's logo appear in any way. Let's put a 2 disclaimer in there to disclaim any association or to 3 address the concerns of the Controller. 4 I'm a tad bit confused, I mean, we -- not 5 confused, I'm not, but it is -- we're -- 6 MS. MANDEL: It's -- 7 MR. HORTON: -- transparency is transparency. 8 Conflict of interest is conflict of interest. 9 And if there's a sense that a logo creates a 10 conflict of interest and there is a concurrence here -- 11 I mean, I don't think it creates a conflict of interest, 12 but, to be honest with you, if it is -- if the 13 Controller feels it does, then I have to respect that. 14 I mean, he is an elected official. And if any of my 15 elected colleagues believe that it does, then I'm 16 prepared to -- to support a policy that said -- says, 17 "Don't do it. Just don't associate it," and to give 18 staff that sort of direction, if that's the concern. 19 And I've stated that I'm prepared to go even 20 further in other areas where there could be an 21 appearance from a public perspective of a conflict of 22 interest because of the inherent nature of this body and 23 which, to some, is perceived to be different. 24 These things have absolutely no influence over 25 me. I'm going to make decisions based on the merits of 26 the issue. And I think -- well, I know that folks are 27 fully aware of that. 28 But if it troubles others, I am certainly 20 1 prepared to go way above the law in order to make my 2 colleagues comfortable, to make the public -- whoever 3 this public is -- comfortable as well because it is our 4 responsibility. 5 Even if the public is in the minority, we 6 should try to make them aware and confident of what this 7 agency is. And that's measured by the five individuals 8 who have been elected to do that job. 9 Mr. Runner? 10 MR. RUNNER: Mr. Chair, maybe I can try to find 11 some middle ground here on this issue. 12 I think the concern, at least I'm hearing, 13 from -- from the Chair, at least, and it's certainly 14 part of my concern too, and that is to task the staff to 15 come back with a recommendation to which the elected 16 members need to do is a lot different than what takes 17 place when the Controller decides for himself what he 18 wants to do or the AG decides what they're going to do 19 and their staff. 20 So, I think that's a little bit the unique 21 thing that we have here. I think what I am hearing the 22 Chair say is that certainly things that might grow out 23 of this can -- this is -- this body, as a group of 24 elected members, would be the kinds of things that might 25 be considered. 26 So, let me say, that maybe the way to get 27 through this is -- is -- is to have the Chair and the 28 Vice Chair sit down and work through some of those 21 1 issues that Members have talked about and come back with 2 a specific recommendation. 3 So, it's not coming from staff, it's coming 4 from other elected officials here who could then come 5 back and make that report to us. 6 That seems to, at least I think, get us to the 7 core issue. I am not sure we want to just start going 8 down the laundry list of things and whether it's logos 9 or whatever it is and start dealing with that. 10 But I'm open to going ahead and letting a 11 subcommittee deal with that and the Chair and Vice Chair 12 would seem to be a good balance to -- to at least see 13 how that list could provide and what it would be in 14 there and then we could go ahead and make that decision. 15 We still have to vote on it, but at least it's 16 not an issue where we're putting staff in the position 17 of trying to come up with what's appropriate for elected 18 officials or for the agency. 19 MS. YEE: Mr. Chairman? 20 MR. HORTON: Member Yee? 21 Thank you, Mr. Runner. 22 MS. YEE: I want to pose a question to the 23 staff and Miss Cooke and Miss Gore. 24 Ms. Mandel's motion, how do you perceive that? 25 What would you do if that passed? 26 MS. COOKE: Miss Gore, it's her area. 27 MS. GORE: Well, you know, I would have to 28 think it through. 22 1 But we would look at those items that are 2 already out there, those standard operating procedures 3 manuals that SBA and IRS have that we alluded to earlier 4 and see what specifics they had and, perhaps, come up 5 with our own standard operating procedures. 6 Clearly because staff would need some guidance 7 as to which way the Board wanted to go on any particular 8 issue, we would have a series options related to logos, 9 partnerships and all of the issues that have been 10 brought forward. 11 So, there would have to be some sort of 12 discussions in some sort of a forum and bringing options 13 before the Board might be the best way to do that. 14 MS. YEE: Okay. 15 MR. HORTON: That's -- 16 MS. YEE: -- and I think that's appropriate. 17 I mean, I guess here's what I'm troubled by, we 18 have a great staff here. You know how to do your job. 19 I don't want to micromanage your job. 20 And I think options is what I really expected 21 to have come forward. We're going to vote on these. We 22 have to adopt the guideline. We're the Board Members. 23 It's a policy that we're going to embrace as a body. 24 I guess what I would want is -- to have, in 25 addition to what you have just described Miss Gore, is 26 to then look internally with respect, you know, what are 27 all of the things that we've engaged in? 28 I don't know that I would start kind of backing 23 1 into policy or a set of guidelines that happens to 2 comport with that of another entity that doesn't speak 3 specifically what we do here at the Board. 4 And -- I mean, I think the focus ought to be on 5 what this Board is engaged in and then your options 6 really drawing from what others -- how others address 7 it. 8 And bring that back -- I mean, I think that 9 agenda -- and confer with each of our offices, if -- in 10 terms of whether we have other thoughts about it. 11 But I'm not -- this isn't -- I don't think this 12 is that complicated. I mean, I really don't. 13 And I'm happy to provide input to you, but -- 14 and I'd like to at least have each of us be able to do 15 that. 16 But I think do the staff is in the best 17 position to kind of compile some recommendations for us 18 to consider or options for us to consider. 19 MS. MANDEL: I have a motion and a second, 20 Mr. Chair. 21 Can we get a vote? 22 MR. HORTON: There's a motion and second on the 23 floor. 24 Further discussion, Members? 25 MR. RUNNER: Just a quick observation. 26 No matter how this goes down, the fact is that 27 each Member can individually deal with how they want to 28 deal with these issues in events that they sponsor and 24 1 things that they do, you know, whatever that would be. 2 And that certainly is up to each Member to -- 3 MS. YEE: Yeah, that wouldn't change. 4 MR. RUNNER: -- apply themselves. 5 MS. YEE: That wouldn't change. It's the 6 overarching guidelines -- 7 MR. RUNNER: Yeah. 8 MS. YEE: -- by which we adhere to to do that. 9 MR. RUNNER: Yeah. 10 MR. HORTON: Hearing none, Ms. Olson -- further 11 discussion, Members? 12 Hearing none, Ms. Olson, please call the roll. 13 MS. OLSON: Mr. Horton? 14 MR. HORTON: No. 15 MS. OLSON: Ms. Steel? 16 MS. STEEL: No. 17 MS. OLSON: Mr. Runner? 18 MR. RUNNER: No. 19 MS. OLSON: Ms. Yee? 20 MS. YEE: Aye. 21 MS. OLSON: Ms. Mandel? 22 MS. MANDEL: Aye. 23 MS. OLSON: Motion fails. 24 MR. HORTON: Now I would make a motion to -- to 25 examine the recommendations that have been brought 26 forward to the Board as reflected in the grid as to what 27 each agency does, that we codify and summarize and 28 delineate all of the activities that other agencies are 25 1 doing. And then that we share that with each of the 2 offices that are represented by this body and that each 3 office provides their input -- such that we don't appear 4 to be able to get the input publicly at this point -- 5 provides their input. 6 And then that that input, along with the 7 summary of the -- what other agencies and best practices 8 are out there and the law, including the Board of 9 Equalization -- and then bring that back to the body for 10 discussion. 11 I think at least in doing so, the staff has 12 done the analytical research in determining what's the 13 best practices there. They have solicited what each 14 Member thinks should -- should occur. 15 And, I mean, as I said, I am willing to submit 16 to whatever makes any Member of this body comfortable, 17 and irrespective of the extreme, because, quite frankly, 18 it appears that I am prepared to be more extreme than 19 anyone relative to these issues. 20 So -- and that would be my motion, which I am 21 not -- 22 MR. RUNNER: I'm not sure what that is. 23 MR. HORTON: -- well, the motion is to -- is 24 for staff to take all of the best practices out there as 25 far as minimizing any issue of conflict of interest 26 relative to outreach. 27 And possibly later on we'll deal with the other 28 issues of conflict that I'm concerned about and we'll 26 1 have staff come back and give us recommendations in 2 those areas as well. 3 But for now, as it relates to outreach, take 4 the best practices, as they have already appeared to 5 have done, in my mind, from each agency that is a 6 government agency and delineate those, give us a 7 complete listing of each one and any reference to 8 whatever law that governs that or policy, submit that to 9 each office. 10 Have each of our offices provide our 11 independent input for them to take a look at -- to 12 provide that information to every Member so that they 13 are armed with that for future discussion. 14 And then, if -- and then let us -- let us 15 debate it and determine which ones we want to adopt. 16 This way we get everything on the table. 17 But to -- to impose that responsibility on the 18 staff is just a relinquishing of what I believe to be my 19 responsibility. 20 MS. STEEL: Mr. Chair, so, is that your 21 direction is to staff to find out from other agencies 22 that they have a different practice than they -- 23 MR. HORTON: I believe they've done that 24 already, but -- 25 MS. STEEL: -- right. And then give us those 26 informations. And we going to review and we going to 27 put the input there. 28 And then they going to bring it back to us and 27 1 then we'll discuss it? 2 So, it's a direction, it doesn't have to be a 3 motion. 4 MR. HORTON: Well, you know, I would like to 5 have a consensus from the body. 6 I mean, I don't want to -- 7 MR. RUNNER: I guess I'd would go back to staff 8 and say, how would -- how do you understand the 9 instructions? 10 MS. GORE: Based on the instruction that was 11 given here, without listening back to it again, I would 12 outline what we've determined to be the best practices 13 of other agencies. 14 As you've all stated, there is no other agency 15 just like us -- 16 MR. HORTON: Franchise Tax Board. 17 MS. GORE: -- not elected Members. 18 MR. HORTON: Oh, okay. 19 MS. GORE: We are unique. So that, you know, 20 we're in a unique situation. 21 So, not all best practices for everybody else 22 would necessarily apply. 23 I might -- 24 MR. HORTON: Miss Gore -- 25 MS. GORE: -- put like a questionnaire -- 26 MR. HORTON: -- I hate to interrupt you, but 27 possibly judges, they're elected. The legislature is an 28 elected body, it makes decisions, and certainly seeks 28 1 to -- to protect its integrity as a body. 2 So, the AG is an elected body, Treasurer, 3 elected body, even the State Controller is an elected 4 body. 5 Certainly I would believe -- I mean, the State 6 Controller brought it up, we can just get a copy of his 7 and -- but, so, there are others out there that are 8 elected officials that we can take into consideration. 9 MR. RUNNER: Again, I think my -- my position 10 would be the same, and that is, I would -- I would feel 11 comfortable if that would be done, that would be good. 12 It might be helpful to my office. 13 If they were to report that back to my office, 14 then we can review that and see how it is that we, 15 within our outreach programs and whatnot, would apply 16 those. 17 But I'm perfectly comfortable as the elected 18 official making my own decisions in regards to these 19 issues and then being accountable for those. 20 You know, if they don't work, then they don't 21 work. If I'm accused of something, then I'm accused of 22 something. But I'll take on that responsibility. 23 And, so, I don't mind at all if we want to 24 instruct the staff to put together something like that, 25 report it back to us. And then, as an elected official 26 within my district, I'll do what I got to do and I'll 27 choose which ones make sense, which ones don't. 28 I certainly understand the law now. It's been 29 1 well laid out. I understand what our practices are. 2 And if I want to go beyond that, I can go beyond that. 3 But that's where I'm most comfortable with and 4 then I'll take either the political heat or the 5 political accolades for what it is I may choose to do as 6 the elected official. 7 MR. HORTON: Well, Mr. Runner, we are a hybrid 8 sort of organization, in my mind, in that we have a 9 collective responsibility to give direction to what the 10 administration can do. 11 And, so, I think we should do that and that we 12 should protect the -- and I know you agree with this -- 13 MR. RUNNER: Yes. 14 MR. HORTON: -- the integrity of the 15 administration. 16 And certainly we, as elected officials, will 17 face the public throughout our experience. But I think 18 we -- we have to give some -- some direction, some 19 clarity. 20 Quite frankly, I think the policies -- I would 21 also ask that we go back and review our existing 22 policies and procedures because they are pretty 23 stringent and -- and, as previously stated, that the 24 policy is not to have private logos and government 25 printed items, except for a case-by-case basis. 26 And, so, the judgment of our legal team, our 27 communications and the Executive Director in determining 28 whether or not what's been proposed is legal or not is 30 1 pretty good checks and balances for what we seek to do. 2 And, so, to that extent, we have some -- to the 3 extent that we, as individuals, elected officials, are 4 doing what we do, certainly the public will be the 5 ultimate judge on that. 6 But we want to position staff -- at least I do, 7 I want to position staff to tell me what I can and can't 8 do as it relates to the law. And I am -- and to 9 prohibit me from doing what this body has decided to do 10 collectively because I want to be submissive to it. 11 I think that's -- that's democracy at its best 12 is when you submit to the will of the people and the 13 balance of governance. 14 So, I'm prepared to bifurcate those two, if you 15 will, in a discussion. But I think we need to give some 16 collective directions. 17 But I interrupted Miss Gore, but if there's any 18 other questions then I will go back to Miss Gore to -- 19 for her to summarize what she believes has been asked of 20 her. 21 MS. STEEL: Mr. Chair, I just don't understand 22 that -- what your direction is exactly clearly. 23 So, I think it's going to help Miss Gore 24 that -- so, you want to have -- they already did other 25 tax agencies and other agencies. 26 So, you are asking staff to bring the back from 27 other departments -- like judges or Controllers or 28 Treasurers -- and then you bring it back, something like 31 1 what they have right now, and then give to each offices. 2 And then we going to put some input there. 3 Then they going to bring it -- they going to put those 4 things together and then they going to bring it back and 5 then we going to discuss it? 6 Let's make it a little more simpler because, 7 you know, I really don't know what the clear direction 8 here is. 9 Is that what you are asking? 10 MR. HORTON: Yes, although -- 11 MS. STEEL: Thank you. 12 MR. HORTON: -- although I am seeking the 13 consensus of the body in doing so. 14 And maybe Miss Gore can sort of summarize for 15 us what I am seeking the consensus of the body in 16 that -- in that regard. 17 Because if you review the Board of Equalization 18 policy and you look at all of the policies by the other 19 agencies, by the legislature and so forth, ours are the 20 best practices. The checks and balance system is 21 superior to many of the others. 22 And the -- and there are some tweaking that I 23 think we can do. And if the Members are prepared -- and 24 I think we, as a body, can make those tweaks. 25 I mean I keep hearing this thing about the logo 26 and I'm clearly prepared to tweak it there. 27 Partnerships with private industry, I don't 28 think we have partnerships with private entities that 32 1 practice before us. 2 Whether or not they should sponsor an event, I 3 am prepared to have a discussion and conclusion on that 4 as well. 5 But this may be helpful because it appears that 6 we're not prepared to have that detailed of a discussion 7 publicly. 8 So, it might be helpful for us to provide our 9 input through a different medium and then bring it forth 10 after we've all sort of had an opportunity to look at 11 it. 12 And I am prepared to serve on a subcommittee, 13 if that be the desire of the entire body. I'm not 14 prepared to take on an assignment for -- because one or 15 two people want to give me a job. 16 Now, if the entire body wants me to do some 17 work, I will do whatever the body desires. 18 Member Yee? 19 MS. YEE: Thank you, Mr. Chairman. 20 I'd like to request that whatever further work 21 is done in this regard be done by this body in a public 22 setting. 23 I know there is some work that has to be done 24 in terms of compiling the information and that's fine, 25 but I think the consideration of what's been compiled 26 should be brought back before this body for discussion. 27 I guess I'm at a completely different level. 28 I'm not speaking about specific outreach events and what 33 1 each of you may decide to do in your district. I think 2 the guidelines I was actually seeking -- and I'm not 3 sure that -- I think it's consistent with what the 4 Controller had requested -- is really having a clear 5 sense of an analysis and guidance to us with respect to 6 the use of State resources for the various types of 7 activities that this Board and its Members engages in 8 where there are private resources involved, how Board 9 Members ought to view that. 10 Mr. Horton -- Mr. Chairman, you spoke about the 11 partnership with the LA County Bar. That's a private 12 entity, it's not a public entity. And I believe that 13 what you convened there was for a public purpose, but it 14 was a private resource. 15 And, so, how do we look at that? How do we 16 look at, you know, other -- other types of private 17 resources that are involved in the activities of this 18 Board and/or its Members engage in? 19 And then the last, I think, topic that we 20 actually spent a little bit time on is this whole issue 21 of behest at payments. And I know we had a memo from 22 Legal Department recently about that. 23 And my issue on that is that I just don't know 24 that the public knows what that is. We just need to 25 acknowledge what it is, explain why -- why it's 26 appropriate in terms of some of the Board's activities 27 and just put the information out there. 28 I mean, that -- we know about it inside, but 34 1 sometimes I think a lot of the speculation about 2 impropriety or, perhaps, inappropriate expenditure of 3 funds or inappropriate actions by this Board in terms of 4 what we decide to do relative to reaching out to 5 taxpayers is just because of the lack of information 6 with regard to how we pull these types of things 7 together and how they're supported financially. 8 So, I'm -- I'm looking at kind of analyses with 9 respect to kind of those three specific things on each 10 of the things that any of us may suggest to the staff. 11 Because that's really what the guidelines, I think -- I 12 mean, that's what I'm seeking. 13 And they're not just for me, it's for the 14 public in terms of what to expect of their elected 15 representatives. 16 MR. HORTON: I like that. 17 Any other comments? 18 Miss Gore, you're up. 19 MS. GORE: Well, we will go back and come -- 20 through memo, come up with a series of steps that we'll 21 take. 22 We will look at what other agencies do. We 23 will solicit input. I would like if this body would 24 think it is a good idea to perhaps put together a work 25 group, maybe not necessarily a formal interested parties 26 group, but maybe gather some of the people from the 27 public, find out what their expectations are of a body 28 like ours, and include their input in this process as 35 1 well. 2 MR. HORTON: I'm not necessarily prepared to go 3 through there. 4 Why don't we look at what the Controller does 5 and we'll just do that? 6 Or the concern is there, you know, prepared to 7 do it -- do that, whatever it is -- although I may want 8 to go a little further, but -- and I agree with 9 Member Yee. 10 At the end of the day, though, we may just want 11 to submit our activities in advance to the Members or 12 have a process that -- that assures that these 13 objectives are met. 14 And I would have to just encourage all of us to 15 study what we currently do, what the policy is. 16 We have a complete legal team that's required 17 to review all of these. And it certainly is on a 18 case-by-case basis in that review. And it -- if we want 19 to say we stick to our existing policies and remain 20 consistent there and there are no exceptions, we can say 21 that as a body. And I think that will work out well. 22 MR. RUNNER: And Mr. Chair, that would -- I 23 mean, that would absolutely be my point. 24 My point is we have guidelines. We have a 25 legal process. We know what it is that we need to be 26 doing. 27 And if any Member wants to then make a higher 28 standard, let that higher -- let that individual do that 36 1 within their events. 2 Now, I do understand if we want to apply this 3 administratively that we do have responsibilities as a 4 Board to apply it then to staff and in events that the 5 staff would do. 6 But I don't think those are the ones that are 7 in question. I think the ones that seem to be in 8 question are the ones that the Members are engaged in. 9 So, I can't -- 10 MR. HORTON: Not to interrupt, my apologies for 11 doing so. 12 I think Member Yee was very articulate and when 13 she sort of codified the essence of this is that we are 14 concerned about what staff does. We are concerned about 15 the resources the staff uses for our events and when 16 they participate in our events or when they participate 17 in their own events. 18 Classic example, staff certainly participated 19 in the event that I did with the Los Angeles Bar 20 Association in an effort to educate lawyers and 21 practitioners who come before this Board every day. 22 And they paid for it. So, they paid for the 23 hotel. They paid for the lunch. And they practice 24 before this body every day. 25 And three members of this body participated in 26 that event. And staff participated in it. 27 Why? Because we felt that it was -- at least 28 from my perspective, I don't want to speak for my 37 1 colleagues, but I felt that it served the educational 2 outreach goals and objectives of this agency to educate 3 the public, despite the fact that it was a private 4 partnership. 5 They paid for it. They had their logo on the 6 flier, associated directly with us. But it met -- it 7 was legal and met all of the standards and did not 8 challenge the integrity or any conflict of interest of 9 this agency. 10 And it fulfilled our mission and objectives 11 and -- 12 MR. RUNNER: And, Mr. Chair, I would agree. 13 MR. HORTON: -- frankly, I was actually looking 14 at the Board having a table at the Los Angeles County 15 fair to take out -- to have permits and licenses and so 16 forth. 17 Now, the things that go on at the Los Angeles 18 County fair have absolutely nothing to do with us, but 19 it is an opportunity to educate our constituencies and 20 to provide them with information. And I -- quite 21 frankly, I would ask the Los Angeles County fair that 22 they sponsor it, that the agency be allowed to set up a 23 table free and get through the gates free. And, 24 clearly, that is an extreme where there is no 25 association. 26 And if the CPA society was doing an event, 27 which is on the other side of the spectrum, but still 28 the same thing, I would ask that we participate in that 38 1 as well. 2 We've got an event coming up with the 3 California CPA Society. 4 There is an event coming up with the Chamber of 5 Commerce, arguably, all of their members will eventually 6 practice before this agency, that Mr. Chiang is doing 7 that I intend to attend because I think he's doing a 8 yeoman's job in reaching out to that constituency that 9 practice before us. 10 If we don't seek to educate and participate 11 with the constituency that practice before us, we can't 12 have -- we can't be inhibited to that extent. 13 But the notion the -- well, not the notion, but 14 protecting the integrity of this agency, there is some 15 room here that we don't send the wrong message and 16 possibly the legal staff can give us some disclaimers 17 to -- 18 MS. YEE: Guidelines. 19 MR. HORTON: -- to address -- guidelines, thank 20 you, Member Yee -- some guidelines on how we can best 21 balance out that communication to the public or the 22 appearance to the public. 23 But we've got to be very careful here. But if 24 the body is telling me that I can't do this event at the 25 Los Angeles County fair, I get it. 26 You know, as I said before, it's one of the 27 responsibilities and I believe in a democracy if I go 28 whichever way that the majority will vote. 39 1 What I'll do personally, of course, I'm 2 pretty -- pretty stubborn in that regard, but -- 3 MR. RUNNER: Well, the Chair will be glad to 4 know that the BOE was well represented at the California 5 State fair. 6 I got many reports of SCOP visits that went to 7 all of the different vendors and -- 8 MR. HORTON: I know, I understand they had a 9 little bit too much fun. 10 And I want to caution staff on not having fun 11 at these things. We can't -- 12 MR. RUNNER: I don't think they got wristbands 13 out of the deal. 14 MR. HORTON: Yeah, we can't have you on the 15 rides, okay, and the exhibits, we don't necessarily want 16 that. 17 Okay, all right, Members -- 18 MS. YEE: So, where are we? 19 MR. HORTON: We look forward to -- we look 20 forward to you -- to Miss Gore coming back or sharing 21 some information with the -- with the Members. 22 And then, Members, I'd like to -- wow, I can't, 23 you know, because of the Brown Act and Bradley Burns and 24 all that other stuff, I was going to say I'd like to 25 hear from you guys, but I can't. 26 Okay, so be it -- whatever it is, give it a 27 good shot. Try. Come back and we'll go from there. 28 We'll see what we come up with, okay? 40 1 Thank you. 2 MS. GORE: Thank you. 3 ---o0o--- 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 41 1 REPORTER'S CERTIFICATE. 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, JULI PRICE JACKSON, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 JULY 26, 2011 I recorded verbatim, in shorthand, to the 10 best of my ability, the proceedings in the 11 above-entitled hearing; that I transcribed the shorthand 12 writing into typewriting; and that the preceding pages 1 13 through 41 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: August 9, 2011 17 18 19 ____________________________ 20 JULI PRICE JACKSON 21 Hearing Reporter 22 23 24 25 26 27 28 42