January 2003

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Dean Andal served in the state Assembly prior to his election to the State Board of Equalization, and could not seek a third four-year term on the tax regulatory agency board because of term limits. He ran unsuccessfully for the Republican nomination for state controller in 2002. He is director of state and local taxes for the accounting firm KPMG in Sacramento.

The author, Eric Miethke, is a tax attorney and partner in the firm of Nielsen, Merksamer, Parrinello, Mueller and Naylor.

Every elected official takes office with the same promise – “to make a difference.” The sad reality is that few do. Californians have lost to term limits one elected official who kept his promise. Dean Andal is one elected official who in eight short years changed the face of California tax policy, perhaps forever.

Prior to Dean’s election in 1994, the State Board of Equalization was an obscure agency that wielded tremendous power in the tax arena. Unfortunately for the taxpayers under the board’s sales tax, property tax, income tax or excise tax jurisdiction, that power was usually focused at squeezing more money out of taxpayers struggling to comply with a tax system that was hopelessly stacked against them. Taxpayers stood a better chance of successfully defending the Alamo than they stood of prevailing in a tax case before the board.

Dean Andal changed all that. Unafraid of working hard to understand the intricacies of tax laws at least as well as the long-term staff, Andal proceeded to systematically work through most, if not all, of the board’s property tax rules and sales tax regulations and rewrite them to reflect modern changes in technology and business practices. The list of industries that were strengthened under this determined Andal initiative is a Who’s Who of the California economy. Agriculture, high-tech, research and development, motion picture production and post-production, advertising, software development and manufacturing, hotels and motels, wineries, banking, printing, food processing, fairs and expositions and electronic commerce are just a few of those industries that began to see rationality returned to the rules governing the taxation of their operations.

The process by which he accomplished these changes is as important as the changes themselves. The board staff now writes issues papers, takes input from the public, has meetings of interested parties, and works to resolve differences with taxpayers before issues are presented to the board. This opening of the process, virtually unprecedented in the board’s 100-year history and unique amongst the states, is a fundamental change that will last for generations, because taxpayers now have come to expect and will demand it from future boards.

Unlike scores of politicians who made empty promises to reduce the size of government and make it more efficient, Dean Andal actually did it. Prior to his election, the Board of Equalization had myriad employees staffing offices in out-of-the-way parts of the state. Board members, like the rulers of the British Empire, historically believed that the Board of Equalization would be made stronger by putting an office in small, far-flung towns as a way to help the local economy. One would be generous to say that some of these offices may have made sense in the 1930s and 1940s, but in the economy of today, they were the epitome of a wasteful government. Under Andal’s leadership, offices were consolidated or eliminated, the supervisor-to-worker ratio was reduced, automation was promoted and needless overhead eliminated. Andal leaves a board that handles a great deal more revenue than when he arrived, but does so with virtually no net growth in workforce. This statistic stands in stark contrast to the board’s sister agency, the Franchise Tax Board.

Dean Andal also changed the relationship between the Board of Equalization and county property tax assessors. The board, charged under the Government Code with oversight of county assessors and assessment appeals boards, used to instead “rubber stamp” whatever the assessors wanted, which generally did not bode well for property and business owners. Firmly, Mr. Andal let the assessors know he took his oversight role seriously, and attacked assessor abuses where he found them, even leading the board to enforce the law against assessors in the courts if necessary. In eight years, Mr. Andal accomplished more to rebalance power between assessors and taxpayers than any other of his board predecessors.

Not satisfied with limiting his impact to California, Dean’s qualities of hard work, preparation and consensus-building took him onto the national and international scene. Named by then-house Speaker Newt Gingrich to the federal Advisory Commission on Electronic Commerce, Andal quickly established himself as a leader in the effort to keep electronic commerce from being smothered under a pile of state and local tax laws imposed by thousands of jurisdictions nationwide. His vision for the appropriate paradigm for taxing electronic commerce became the cornerstone of the commission’s final recommendations, and several pieces of federal legislation. Certainly, his efforts contributed to slowing the effort to overturn the Quill decision with federal legislation.

It is one thing to change a policy, but quite another to change the culture of a government tax agency, and that is perhaps the most lasting impact Dean Andal’s tenure at the board will have. A shrewd judge of character, Dean worked quietly to ensure that the key policy-making positions at the board were filled with government servants dedicated to a policy of openness and fairness to taxpayers. He looked for people who were technically superior, but who also understood the role of the board as the shock-absorber between a government hungry for revenue and a vibrant economy trying to comply with a complex and often nonsensical set of tax laws. Because a whole generation of board employees have now been raised with this cultural outlook, it will be difficult for the board ever to return to its former taxpayer-unfriendly ways. And that is a legacy of which he should be very proud.

Through it all, Dean Andal maintained the qualities that those who have known him since childhood often cite: honesty, integrity, honor, love of family, and good humor. (It should come as no surprise to those who recognize such qualities that his wife, Kari, notes that by service as Scoutmaster of Troop 178 in Stockton, Dean is deeply committed to the Boy Scouts program “and to the ideals of character it espouses.”)

Persons of all political beliefs and backgrounds sought out his company because, above the political fray, he was just a good person and fun to be with. His sense of humility often allowed others to take the spotlight for changes that he had engineered, in order for those changes to become politically viable. But that is the personal quality that perhaps lies at the foundation of Dean’s success: the burning desire to accomplish the goal, to move the public good forward and to make a better world for those who placed their trust in him. It is that laser-like focus and pursuit of a goal that the taxpayer community will miss the most.