BILL ANALYSIS Ó
AB 582
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Date of Hearing: April 27, 2015
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Philip Ting, Chair
AB 582
(Calderon) - As Amended April 21, 2015
Majority vote. Fiscal committee.
SUBJECT: Professionals in Public Service Act of 2015
SUMMARY: Establishes a professionals in public service program
(Program) within the State Board of Equalization (BOE) to
utilize the expertise of private-sector professionals "to help
make state governmental activities and practices more
streamlined and accessible to small businesses." Specifically,
this bill:
1)Establishes the Professionals in Public Service Act of 2015
(Act).
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2)Contains the following legislative findings:
a) California is home to some of the most innovative and
resourceful entrepreneurs in the world, making it the
nation's leader in technology and related industries;
b) The state should harness this innovation and leverage it
to provide the best possible customer service to all of its
citizens in the most cost-effective, efficient, and
creative manner;
c) Creativity and efficiency should not be limited to the
private sector, but rather should be embraced and developed
to further the public interest;
d) The Act applies a philosophy of success to state
government, allowing the most creative private sector
professionals to volunteer their time and expertise to make
government work better for its citizens;
e) Establishing the professionals in public service program
in a California state agency is a model that has been
applied successfully by a variety of public and private
entities and has proven to be a useful tool to help various
processes become more efficient; and,
f) It is the intent of the Legislature that the Act serve
as a model for similar measures authorizing other state
agencies to utilize and adopt similar programs, where
applicable, to support and streamline activities associated
with their regulatory responsibilities.
3)Directs the BOE, by March 1, 2016, to adopt procedures for
implementing the Program, and to begin accepting applications
within 60 days after their adoption. At a minimum, these
procedures must include all of the following:
a) The BOE director (Director) may appoint one or more
professionals in public service under the Program during
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the Program's existence. However, the Director shall not
appoint more than five professionals in public service
during any calendar year;
b) Nominations for appointment may be submitted by any
entity, public or private;
c) An application for appointment may be submitted in
writing on a form developed by the BOE, or through an
online application process established by the BOE;
d) Any person appointed as a professional in public service
shall meet at least one of the following qualifications:
(1) The individual shall have demonstrated success in
working with California small businesses and entrepreneurs;
or, (2) The individual shall have successfully developed,
invented, or created a product and brought the product to
the marketplace;
e) A person appointed as a professional in public service
shall not have a conflict of interest with the activities
of the BOE, including, but not limited to, having any
existing business before the BOE;
f) A process for screening prospective appointees,
including checking backgrounds and references;
g) A standard memorandum of understanding that stipulates
the responsibilities of each party in undertaking a
"professional in public service" [sic] under the Program,
including duties, goals, expected outcomes, administrative
support, and office participation. This standard
memorandum of understanding may function as a model for
future professionals in public service programs; and,
h) A reporting process, as specified.
4)Provides that the appointment of a professional in public
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service shall be made no later than August 1, 2016. The final
date of service of a professional in public service shall be
December 31, 2017.
5)Provides that, before the effective date of an appointment,
every individual selected to participate in the Program shall
have entered into a memorandum of understanding with the
Director, as specified.
6)Specifies that procedures adopted under this bill are exempt
from the rulemaking provisions of the Administrative Procedure
Act.
7)Provides that, subject to the confidentiality requirements of
Government Code Section 15619 and of the Revenue and Taxation
Code (R&TC) applicable to the BOE, a professional in public
service shall have the following duties:
a) Providing recommendations to the BOE on how to
streamline, eliminate, or modify potentially inefficient or
duplicative activities, processes, and programs, if any, of
the BOE;
b) Providing recommendations to the BOE on methods to
improve program efficiency at the BOE or new initiatives,
if any, that may be instituted at the BOE to address the
needs of small businesses and entrepreneurs;
c) Assisting the BOE in improving outreach and service to
small business concerns and entrepreneurs including the
following:
i) Facilitating meetings and forums to educate small
businesses and entrepreneurs on programs or initiatives
of the BOE;
ii) Facilitating in-service sessions with employees of
the BOE on issues of concern to entrepreneurs and small
businesses; and,
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iii) Providing technical assistance or mentorship to
small businesses and entrepreneurs in accessing programs
at the BOE.
8)Provides that a professional in public service shall serve on
a project-based, voluntary basis, and shall be given a
timeline for completion. At the discretion of the Director,
the professional in public service shall have access to an
office, computer, and other related support services and
equipment as the Director determines to be necessary for the
professional in public service to discharge his or her duties.
9)Specifies that a professional in public service shall report
directly to the Director.
10)Requires the Director to establish an informal working group
of professionals in public service to discuss best practices,
experiences, obstacles, opportunities, and recommendations.
11)Requires the Director annually to prepare and submit to the
Governor and the Assembly Committee on Jobs, Economic
Development, and the Economy a report on the Program, as
specified.
12)Sunsets automatically on January 1, 2022.
EXISTING LAW:
1)Establishes the BOE, which consists of five voting members:
the State Controller and four members elected for four-year
terms at gubernatorial elections. The State is divided into
four BOE districts, with the voters of each district electing
one member. (California Constitution Article XIII, Section
17.)
2)Specifies that any member or ex-member of the BOE, or any
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agent employed by it, or the Controller, or ex-Controller, or
any person employed by him or her, or any person who has at
any time obtained such knowledge from any of the foregoing
officers or persons, shall not illegally divulge any of the
following items of information concerning the business affairs
of companies reporting to the BOE:
a) Any information concerning the business affairs of any
company that is gained during an examination of its books
and accounts or in any other manner, and is not required by
law to be reported to the BOE;
b) Any information, other than the assessment and the
amount of taxes levied, obtained by the BOE in accordance
with law from any company other than one concerning which
that information is required by law to be made public; and,
c) Any particular item of information relating to the
disposition of its earnings contained in the report of a
quasi-public corporation that the corporation, by written
communication specifying the items and presented at the
time when it files its report, requests shall be treated as
confidential. (Government Code Section 15619.)
FISCAL EFFECT: The BOE estimates that this bill would have no
direct revenue impact.
COMMENTS:
1)The author has provided the following statement in support of
this bill:
California is home to the largest, richest and most diverse
economy in the United States. In fact, according to
Bloomberg, California has overtaken Brazil as the 7th
largest economy in the world. A significant reason being
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the ingenuity of the citizens in our extraordinary state.
Small businesses make up 99.2% of all businesses in the
state and create two-thirds of all new jobs. Subsequently,
the entrepreneurs and local business owners responsible for
California's economic prosperity are some of the best and
brightest in the world. Still, entrepreneurs face many
obstacles in today's economy, such as access to capital and
access to different markets, however, the biggest obstacle
to success is often government itself.
Our representative government is designed to give a voice
to citizens with different views to debate in a public
platform in hopes that consensus can be achieved.
Sometimes, legislators pursue policies that can be
out-of-touch with the public's interest, or behind the
times due to the rapid growth of technological advances.
More to the point, governmental processes are highly
bureaucratic which leads to slow decision making that can
have a direct impact on the private sector.
Incorporating a private citizen who has a diverse technical
background in business, financial and governmental
processes into a governmental entity (e.g. BOE) can provide
government employees direct access to an expert who is
knowledgeable of the various challenges facing businesses
in California today. The result can potentially give
California's business leaders an edge on the world
competition to ensure the continued growth of our economy.
2)Proponents of this bill note the following:
This bill is a great step in the right direction to support
and encourage some of the best and brightest minds in the
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private and small business sector to help positively
influence the operations and business process and procedure
at the governmental agency level.
AB 582 would incorporate a private citizen who has a
diverse technical background in business, finance and
governmental process into a governmental entity where they
can provide the knowledge and tools as an expert to make
positive influences within the agency.
3)The BOE notes the following in its staff analysis of this
bill:
a) The BOE Members discussed this bill at the March 25,
2015 Legislative Committee meeting, but could not support
it : "Specific issues expressed by the BOE Members include:
i) "Is legislation needed to implement a professional
in public service program? The BOE could internally
explore a professional in public service program through
the BOE's Customer Service & Administrative Efficiency
Committee. This Committee's roles and responsibilities
include considering issues to improve customer service
and administrative efficiencies.
ii) "Should the bill apply to state government in
general? A number of state entities that currently
provide oversight and investigate state government
operations, such as the Little Hoover Commission and the
California State Auditor, might benefit from such a
program.
iii) "The BOE is a tax administration and collection
agency that deals with confidential taxpayer information.
Concerns arise over appointees working in BOE offices
with the secured data that BOE maintains."
b) BOE's confidential taxpayer information : "The bill
authorizes, at the discretion of BOE's Director, the
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professional in public service to have access to an office,
computer, and other related support services and equipment.
The March 26, 2015 amendments require that the
professional in public service duties comply with
confidentiality requirements in law. Accordingly, a
professional in public service . . . will only have access
to information that is currently available on BOE's public
website (nonconfidential information)."
c) Appointees cannot have a conflict of interest with the
activities of the BOE : "The extent of the conflict is
unclear. Would a corporate officer of a business that
holds a seller's permit be eligible? Would corporate
officers of a company with a history of not filing and
paying their sales and use tax returns on time be
disqualified? Does a corporation's audit liability appeal
represent a conflict of interest for individuals? BOE
staff will work with the author's office to identify
circumstances that pose a conflict of interest, and
disqualify an individual from participating in the
program."
d) Other states : "Texas and Virginia have enacted similar,
pilot programs referred to as the Entrepreneur-in Residence
Program (EIR). Texas' EIR program is administered by the
Texas Governor's Office of Economic Development and
Tourism. The Governor or the Governor's designee may
appoint not more than 10 entrepreneurs-in-residence to
state agencies during each fiscal year. An appointee is a
full-time employee of the state agency to which they are
appointed.
"Virginia's EIR program is administered by the Virginia's
Secretary of Commerce and Trade. The Secretary may appoint
up to 10 entrepreneurs to serve as
entrepreneurs-in-residence with state agencies. They serve
without compensation but, at the discretion of the head of
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the agency for which they were appointed, may receive
reasonable and necessary expenses incurred in the discharge
of their duties as an entrepreneur-in-residence."
4)Committee Staff Comments
a) The Taxpayers' Rights Advocate : More than two decades
ago, the Legislature enacted the Harris-Katz California
Taxpayers' Bill of Rights (Harris-Katz). That legislation
was designed to "ensure that the rights, privacy, and
property of California taxpayers are adequately protected
during the process of the assessment and collection of
taxes." (R&TC Section 7081.) Among its many provisions,
Harris-Katz directed the BOE to establish the position of
the Taxpayers' Rights Advocate (TRA). (R&TC Section 7083.)
The TRA is charged with facilitating the resolution of
taxpayer complaints, including complaints alleging
unsatisfactory treatment by BOE employees. (Id.)
The BOE notes that the TRA is also responsible for
monitoring tax and fee programs for compliance with
Harris-Katz and recommending new procedures or revisions to
existing policy. The TRA is also charged with recommending
changes in statutes, regulations, policies, and procedures
to improve service to taxpayers. Finally, the BOE notes
that, under existing law, the BOE must develop and maintain
a taxpayer education and information program that includes
all of the following:
i) A program of written communication with newly
registered taxpayers explaining in simplified terms their
duties and responsibilities, and the most common areas of
noncompliance encountered by participants in their
business or industry;
ii) Participation in small business seminars and similar
programs organized by federal, state, and local agencies;
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iii) Revision of taxpayer educational materials
explaining the most common areas of taxpayer
noncompliance in simplified terms; and,
iv) Implementation of a continuing education program for
audit and compliance personnel to include the application
of new legislation to taxpayer activities and areas of
recurrent taxpayer noncompliance or inconsistency of
administration.
This bill, in turn, is designed with the goal of making
state governmental activities and practices more
streamlined and accessible to small businesses. To the
extent the Legislature determines that changes in BOE
processes and procedures are required to accomplish this
end, Committee staff questions whether it might be
preferable to augment or refine the existing authority of
the TRA, who possesses extensive experience in this field,
rather than implement a new program.
b) Defining terms and objectives : As noted above, this
bill is designed to make state government more accessible
to small businesses. For example, a professional in public
service would be responsible for providing recommendations
to the BOE on new initiatives to address the needs of small
businesses and entrepreneurs. This bill, however, lacks
any definition or guidance regarding what exactly
constitutes a "small business". In addition, this bill
requires any appointed professional to have either: (i)
demonstrated success in "working with" California small
businesses and entrepreneurs, or (ii) successfully
developed a product and brought the product to the
marketplace. These categories, however, are so broad in
scope that it is questionable whether they would adequately
ensure small businesses, however defined, are given a seat
at the table. For example, would an external consultant or
vendor to small businesses meet the definition of a
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professional under this bill, even if she worked for a
large multi-national firm? Would a corporate executive at
Apple meet the definition for having successfully developed
the iPhone and brought it to market? While the expertise
of such individuals may prove invaluable, would it
necessarily promote a greater understanding of the issues
faced by small businesses in California?
c) Keeping things confidential : By necessity, a tax agency
such as the BOE handles highly sensitive and confidential
taxpayer information. This information includes tax
account information, employee personnel records, criteria
used for audit selection, and information considered
proprietary in nature. While this bill specifies that a
professional in public service will be subject to the
confidentiality requirements applicable to the BOE, the
potential for inadvertent or intentional misuse of
confidential information is amplified in a tax agency
setting. Thus, Committee staff questions whether the BOE
is the most appropriate state agency for initiating a pilot
program bringing in small business professionals and
entrepreneurs from the private sector.
d) Prior legislation : AB 1675 (Calderon), of the 2013-14
Legislative Session, would have established the
Entrepreneur-in-Residence Act of 2014 to use the expertise
of private-sector entrepreneurs to help make state
governmental activities and practices more streamlined and
accessible to small businesses. AB 1675 was held on the
Senate Committee on Appropriations' Suspense File.
e) Double-referral : This bill was double referred to the
Assembly Committee on Jobs, Economic Development, and the
Economy and passed that Committee by a vote of 8-0 on April
21, 2015. For additional discussion of this bill's
provisions, please refer to that Committee's analysis.
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REGISTERED SUPPORT / OPPOSITION:
Support
Dell
TechNet
Opposition
None on file
Analysis Prepared by:M. David Ruff / REV. & TAX. / (916)
319-2098
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