Publication 216, The First 100 Years


Creation of the First State Board of Equalization

The year 1850 witnessed a host of revenue laws including a poll tax, a military commutation tax, a foreign miner’s license tax, a few minor license taxes, and what was to become the state’s largest source of revenue—a general property tax. The general property tax law, enacted March 30, 1850, provided that “all property, real and personal, within this State, shall be liable to taxation. . .” 12

Although the property tax and the poll tax were the two largest sources of revenue, neither seems to have been a satisfactory source of “equitable” taxation. As early as 1851, Governor Peter H. Burnett reported to the Legislature in his annual message that “six grazing counties with a population of 6,367 paid $41,705.26 in taxes, while twelve mining counties, with a population of 119,917, paid only $21,253.66. The poll tax assessed in the mining counties amounted to $51,495 of which $47,915 was delinquent. In the grazing counties the amount of poll tax assessed was $7,205, the amount delinquent $3,291. During the past year, the agricultural counties, with a population of 79,778, paid $246,247.71 in state taxes, while the mining counties, with a population of 119,917 paid only $21,253.66.” 13

One decade later, a similar report showed little change in this situation.

“In 1861 the commercial and agricultural counties, with a voting population at the last election of 58,933, paid $444,913.95 for the support of the state government, while the mining counties, with a voting population of 60,797, paid only $168,425.26.” 14

The enforcement of a poll tax remained a problem throughout its history and the revenues obtained therefrom were disappointingly small in comparison to the property tax revenues. While the property tax did provide for great revenues and while this tax was more enforceable, it too, had its problems. It had become increasingly apparent that local assessors, “. . . in their endeavor to curry favor with their constituents and to roll a portion of the state tax onto some other counties,” were ignoring the constitutional provision that taxation be “equal and uniform.” 15

Controller George Oulton demonstrated this in his report for the 17th and 18th fiscal years when he revealed that real estate in some counties was assessed at one-third or one-fourth of its value.16 Accordingly, the Controller recommended the creation of a state board of equalization with advisory and supervisorial power. He further advised that an ex-officio board consisting of the Governor, the State Controller, or State Treasurer, and the Attorney General be created,17 to avoid incurring the expense of adding officials to the state payroll.

Even though the succeeding Controller argued against such a board, Governor Henry H. Haight urged the creation of a board in his message of 1869. In compliance with the Governor’s request, the Legislature passed a bill on April 4, 1870, which created a State Board of Equalization, which was to consist of the State Controller, and two members to be appointed by the Governor for four-year terms.18 Its duties were defined as follows:

  1. To investigate the mode and manner in which assessors and tax collectors perform their duties.
  2. To discover whether the assessments made by the county assessors are equal and uniform, according to the location, soil, improvements, production and manufacture.
  3. To equalize assessments by adding to or deducting from the valuation of taxable property in any county or counties, such a percent as would produce relatively equal and uniform valuations between the several counties of the state.
  4. To devise rules by which the county boards of supervisors were to be governed when sitting as county boards of equalization.19

Though the members of this Board faithfully undertook their assignment, they were unsuccessful in correcting the inequities in assessment. Counties were often unwilling to cooperate, and the Board had no real power to enforce its decisions, primarily because the laws were not adequately defined.

In his annual message dated January 7, 1863, Governor Leland Stanford had warned of the “wild confusion” into which the statutes of California had fallen. He further cautioned that “. . . no person, not versed in law, can with any certainty of correctness, turn to the pages of our statute books to ascertain what the law is . . .” The first report of the State Board of Equalization shows a table which exhibits what is termed the “. . . startling disparity between the intention of the law, as to the value set upon property by assessors, and the actual values fixed by them . . .” The report concluded that this was the result of no fixed interpretation of the term “full cash value.” 20

It was not until the passage of the political Code of 1872 that such controversial terms as “full cash value,” “real estate,” “personal property,” and “improvements” were more clearly defined.21 The Political Code, while embodying many of the existing laws, superseded all prior revenue laws. It not only provided a better definition of the law for the Board but also extended and augmented its powers. Under the provisions of the Political Code, the Board was to “. . . enforce the revenue law in a uniform and equal manner; to prescribe rules and regulations governing supervisors when equalizing assessments, and assessors when assessing property; to prepare and enforce the use of forms used for the assessment of property; to equalize the valuation of property of the several counties of the state; to fix the state rate of taxation between the fourth Monday in August and the first Monday in October; to visit as a board or as individual members the different counties of the state to ascertain how property was being assessed; to issue subpoenas for the attendance of witnesses or the production of public records in the custody of the county officers, and to report annually to the Governor the assessed acreage in each county, the valuation per acre, the valuation of town and city lots, the value of each kind of personal property, and any other information relative to the assessment of property and the collection of revenue.” 22

The original 1870 Board was authorized by the political Code to raise and lower assessments in order to achieve “equal and uniform” valuation. However, the Board’s effort to enforce this law was soon challenged. In the case of The Savings and Loan Society v. Austin, 1873 (46 Cal. 415), the plaintiff questioned the constitutionality of the State Board of Equalization on the grounds that (1) its members were not elected by the people and (2) its power to fix the state rate of taxation and to allow for the cost of collecting the state tax was a function of the Legislature. In this case the court affirmed the Board’s constitutionality. However, in January of 1874, the Supreme Court reversed this decision in Houghton et. al. v. Austin (47 Cal. 646). The Court held that Section 3696 of the Political Code, which allowed the Board to raise or lower assessments, was in violation of the Constitution inasmuch as the Constitution specifically required that assessors be elected by the electors of the counties or districts where the property to be assessed was located.

Having lost its power to increase or reduce assessments, the Board could no longer fulfill its original purpose of maintaining “equal and uniform” assessments. Governor William Irwin, recognizing the futility of continuing the Board under such circumstances, recommended that the Legislature abolish this body and substitute an ex-officio board consisting of the Governor, the Attorney General, and the Controller of the State. In response, the Legislature by an act of April 1, 1876, amended Section 352 of the Political Code to comply with the Governor’s recommendation.23 The newly composed Board, by a simultaneous amendment of Section 3692 of the Code, was deprived of its authority to equalize or investigate property assessments. For all practical purposes, the Board had become merely a “statistical bureau and an advisory body,” 24 Its authority would not be restored until the ratification of the California Constitution of 1879.

12 Statutes of California. 1850, Chapter 52, p. 135

13 Fankhauser, op. cit. pp. 137 & 138

14 Figures from San Francisco Daily Evening Bulletin, January 14, 1862

15 Fankhauser, op. cit., p. 186

16 Fankhauser, op. cit., p. 187

17Fankhauser, op. cit, p. 187

18 Statutes of California, 1869-1870, p. 714. (It should be noted here that the Political Codes of 1872 (Sec. 352, p. 68) provided that the Controller would be an ex-officio member, and the other members would be appointed by the Governor.)

19 lbid.

20 Report of State Board of Equalization for years 1870 and 1871

21 The Political Code was enacted in March of 1872

22 Fankhauser, op. cit., pp. 238-239 (as condensed from the Political Codes of 1872, Secs. 3692-3703)

23 Code Amendments 1875-76. Ch. 577, p. 11

24 Fankhauser. op. cit., p. 241