This article is from Cal-Tax Digest, published
by the California Taxpayers' Association.
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Spending Tax Dollars

(Editor's Note: Following are cases where tax dollars have been spent, or misspent. They are generally based on newspaper or government reports.)

Emeryville Schools Chief Quits Under Fire. Despite a high-profile history of mismanagement as Compton's schools chief, J. L. Handy was hired as superintendent of schools in Emeryville (between Oakland and Berkeley) seven years ago. Early this year, he received a vote of confidence from the school board in the form of a three-year extension of his $115,000-a-year contract. However, according to newspaper reports, the 60-year-old Handy rang up $62,000 on his district credit card in just two years, while the three-school, 900-student district struggled, requiring more than $600,000 in bailout loans from the Alameda County Education Department. He resigned on September 30 in the midst of a county grand jury investigation of alleged credit card misuse. There were reports that authorities were examining how the district handled millions of dollars in school construction bonds. In 1990, Mr. Handy was demoted from his assistant superintendent post in Sacramento prior to taking the Compton job. In 1992, as the 31,000-student Compton district's $5 million debt prompted a state takeover, Mr. Handy was ousted from that job. He landed in Emeryville. The school board reportedly was unaware that he charged some personal expenses to the district while on trips to Hong Kong, China, Montana, New Mexico, New York and Monterey since 1998, the San Francisco Chronicle reported. Credit card statements obtained by the newspaper showed that he purchased leather goods and luggage ($800) and pet supplies ($140), and bought items at a cigar store in Florida. A vacation stay at the Crowne Plaza in Manhattan: $2,359. He made 13 trips to the Orange County Airport in Santa Ana, without explanation. He used the credit card almost daily for lunches at a café in Emeryville, and he spent thousands on Emeryville hotel rooms, including several $275 charges last November. The newspaper said Mr. Handy could not be reached for comment. The Chronicle reported on September 27 that parents wanted both the school board and the superintendent to resign. They cited a $995 expense for a week-long class at Harvard University in July that Mr. Handy did not attend. Mr. Handy said that if he had broken rules, "it was only for the kids." Also questioned were three $180 payments in one month to a hotel near the district office, which Mr. Handy told the Chronicle were for luncheons for male staff members put on by the Image of Tomorrow Agenda, a nonprofit mentoring group that teaches self-confidence and public speaking, as well as how to play the stock market. Mr. Handy, listed as the registered agent for the group, was quoted in the paper as saying the seminars were "trying to recognize these men as a cut above." Holding the meeting in a school library would not project the right image, he added. Reacting to the resignation, an Alameda County School Board trustee, Jerome Wiggins, told the Chronicle: "The buck stops in the superintendent's office. This is in the best interest of the kids."

Corporate Scofflaws. The Franchise Tax Board reports that more than 12,476 corporations failed to file 1998 California income tax returns after being notified, and are receiving tax assessments totaling $238 million. In a September 27 press release, Controller and FTB Chair Kathleen Connell said that the "FTB's ongoing enforcement program strives to ensure that all corporations in California file and pay their fair share of state taxes; thereby creating a level playing field for businesses, including those in compliance." Most California corporations pay their taxes - 450,000 of them paying $5.2 billion in 1998, according to FTB spokeswoman Denise Azimi.

"The buck stops in the superintendent's office. This is in the best interest of the kids." - Alameda County School Board member.

Charger Tickets. The continuing saga of waste involving San Diego's contract with the football Chargers for use of Qualcomm Stadium: Taxpayers spent about $490,000 to buy tickets to the October 8 game because of the city's guarantee that the team will receive the equivalent of the sale of 60,000 tickets. The cost to taxpayers for the ticket guarantee exceeds $5 million this year. Mayor Susan Golding has met with National Football League officials and the City Council has ordered its negotiators to try to alter the lease and ticket guarantee, which was negotiated in 1996. Last year, the city spent $6.15 million buying tickets while collecting $5.7 million in rent. That was the first year the tickets cost more than the rent, and it appears to be happening again this year, the San Diego Union-Tribune reported.

Assessor Snafu. The San Francisco Assessor's Office has sent out about 1,000 duplicate tax bills, according to a report in the Chronicle (Matier & Ross, October 9). The muckraking columnists say the latest snafu came on the heels of their report that thousands of deeds were still waiting to be processed, and "from the looks of things, it's going to be quite a while before the job gets done." To correct the mistake of sending duplicate tax bills, notices were sent to 1,300 homeowners telling them to disregard the bills they had just received. But that's 300 more than should have been sent, so another "disregard" letter had to be sent to those who shouldn't have gotten an initial "disregard" notice. Tax Collector Susan Leal has the chore of responding to irate calls caused by the mess created by Assessor Doris Ward's office across the hall. There's more, wrote Matier & Ross: Some tax bills went to previous owners, causing another round of irate calls. A frustrated Ms. Leal said, "It's to the point where we're going to have to call a press conference just to try and explain it all."

Costly Consent Decree. A federal court consent decree for the scandal-ridden Los Angeles Police Department could cost taxpayers $45 million a year, according to a report in the Daily News. City Attorney James Hahn strongly recommended that the city submit to federal oversight. "Given what happened in the Rampart Division, I don't believe we would stand a chance of winning a federal lawsuit," Mr. Hahn said on September 12, after six months of closed-door negotiations and briefings. "And the Department of Justice has made it clear that without us agreeing to this, they are prepared to file in federal court." The city's chief analyst, Ron Deaton, said it would cost $20 million to $35 million to implement the consent decree and $30 million to $45 million annually to carry out. That's about half the cost of operating the city's libraries. Expenses include a new computer system to track complaints against police officers, a larger internal affairs unit, a new audit office and costs of the federal monitor and staff. On October 5, the Los Angeles Times reported that the police union wants the City Council to include a number of long-standing union demands in a consent decree. These include richer pension and disability benefits for all officers, as well as a binding administrative appeal procedure for disciplined officers. Council Member Mike Feuer cautioned the police union that it was not in the best interest of the union to impede finalization of a consent decree. He said some of the union's suggestions might be important, they should be considered outside the context of a consent decree.

A federal court consent decree for the scandal-ridden LAPD could cost taxpayers $45 million a year.