Assessor & Senator Seem To Question Wisdom Of Treasurer-Auditor Fusion

By Mark Gutglueck
From unexpected and unlikely sources, apparent support for the concept of separating the functions of the San Bernardino County auditor-controller/treasurer-tax collector surfaced last week when two members of San Bernardino County’s political establishment made comments in which it seemed they looked askance at the practice of having a single entity safeguarding the public treasury and simultaneously auditing the county’s accounts and its financial ledgers. The remarks in question came while San Bernardino County Assessor/Recorder/County Clerk Bob Dutton and California State Senator Mike Morrell were giving brief public presentations at the beginning of the San Bernardino City Council meeting on October 4.
Morrell was there to provide a legislative update. His 23rd Senatorial District stretches from Rancho Cucamonga, Phelan and Pinon Hills in San Bernardino County and Wrightwood in Los Angeles County on the northwest to Big Bear City and Big Bear Lake in San Bernardino County on the northeast and Cabazon and San Jacinto in Riverside County on the east and down to Hemet and Menifee in Riverside County at its southernmost extreme with all or some of the cities or communities of Banning, Beaumont, Cedar Glen, Calimesa, Cherry Valley, Crestline, Homeland, Highland, Lake Arrowhead, Loma Linda, Mentone, Nuevo, Redlands, San Bernardino, and Yucaipa in between.
Dutton was there to provide a report on the increase in property value in San Bernardino County that was a general trend in 2016 and which was officially recorded into the county rolls by his office as of July 1.
Neither Dutton nor Morell made direct reference to the merging of the treasurer-tax collector’s functions with those of auditor-controller, which was done by the county seven years ago. Nor did they make direct reference to the controversy over that merger. Nevertheless, their comments bore inferentially upon the controversy.
Traditionally in San Bernardino County and at least since the 1960s until the late 1990s, the offices of sheriff, marshal, coroner, treasurer-tax collector, assessor, and auditor-controller were separate offices, though the coroner had the additional title and duties of public administrator and the auditor-controller also functioned as the recorder and county clerk. In 1999, the county merged the sheriff’s department with the marshal’s office, a change that was criticized in some quarters because the marshal’s main function was to provide bailiffs and general security at the county’s courthouses, and the largest number of criminal defendants processed or undergoing trial within San Bernardino County’s courts are ones arrested by the sheriff’s department. The change gave the sheriff’s department the opportunity to control the circumstances under which those defendants were to present themselves to the court and to the juries deciding their fates. In 2005, the county merged the coroner/public administrator’s office into the sheriff’s department, making the sheriff the coroner. Again this was subject to some second guessing, as this made the coroner’s office an arm of a law enforcement agency when a significant number of that law enforcement agency’s most important investigative cases involved actual or suspected homicides. This carried with it the possibility or at least the suggestion that the independence, thoroughness, reliability, focus, competence and integrity of some of the sheriff’s department’s investigations and the operations of the coroner’s office might be compromised. In 2010, San Bernardino County undertook a reorganization of its governmental structure such that the office of the auditor-controller/recorder-clerk shed its recorder and clerk functions, transferring them to the assessor’s office, and the stand-alone treasurer-tax collector’s office was merged with the auditor/controller’s office. There ensued objections that the merger represented an unwise consolidation of duties in which a primary disadvantage consisted in having the county treasurer serving as a watchdog over himself. Thus one person was given the county’s ultimate monetary collection, depositing, investing, accounting, disbursing and financial oversight authority. The incumbent auditor-controller/recorder-clerk, Larry Walker, citing the justification that some other California counties had made similar consolidations, willingly went along with the elimination of individual and independent layers of accountability, motivated, perhaps, by the inducement of the $74,000 annual increase in salary assuming the new position meant to him personally.
The county moved ahead with the consolidation despite the consideration that less than a dozen years before, the-then incumbent treasurer-tax collector, Tom O’Donnell, who was San Bernardino County treasurer-tax collector from 1987 to 1998, had immersed himself in a series of kickback schemes and corruptions of his office in which he, the county’s investment officer, Sol Levin – whom O’Donnell had appointed – and two of the county’s top administrators, Harry Mays and James Hlawek, all participated. Ultimately, O’Donnell entered a guilty plea to accepting a $4,000 bribe and a 1997 trip to London in exchange for helping to steer government contracts worth $372,000 to a county consultant, Richard Tisdale.
In January 2016, a federal investigation into irregularities throughout San Bernardino County’s government structure following two decades in which at least 22 high ranking county officials had been indicted, charged, or convicted of corruption, embezzlement, bribery, extortion, fraud or graft in their official capacities was intensifying. One focus of that investigation spotlighted instances in which lapses in Walker’s oversight as county auditor had allowed questionable activity to flourish, as well as Walker’s 2010 hiring and elevation of Matt Brown into the position of assistant auditor-controller. Matt Brown had been the chief of staff to former county supervisor Paul Biane, who was indicted in May 2011 and charged with participating in a massive political corruption scheme, an element of which involved the laundering of what prosecutors alleged were bribes through a political action committee Brown had set up. Walker, who had been Chino mayor and a council member prior to being elected to the board of supervisors in 1986, remained in the supervisor’s post 12 years before running successfully for auditor-controller/recorder-county clerk in 1998. When he ran for reelection in 2014, he had indicated he intended to remain in the auditor-controller/treasurer-tax collector’s office for the full duration of the four-year term. But unexpectedly, with the FBI seemingly looking under every rock in the county, he announced his retirement just 13 months into his fourth term as auditor controller. Though the county made a show of inviting applications of those seeking to replace Walker, attracting 17 applicants for the position, the determination of who would succeed Walker was never in doubt. A cursory consideration determined that nine met the basic qualifications for the post, which entail either possessing a valid certification as a certified public accountant or having a four-year degree in accounting or its equivalent or at least three years’ experience in a senior fiscal management position with a public agency. The county then interviewed five of those nine, bypassing in doing so Ensen Mason, a certified public accountant who had run against Walker in 2010 on a platform which questioned the wisdom of the merging of the auditor-controller’s function with that of the treasurer-tax collector. That year, Mason garnered 52,445 votes or 29.06 percent to the 128,033 votes or 70.94 percent polled by Walker as the incumbent. In 2014 Mason ran against Walker once more, that time capturing 37,183 votes or 25.68 percent to Walker’s 107,620 votes or 74.32 percent.
As was widely anticipated, the board of supervisors chose Oscar Valdez, the assistant auditor-controller/treasurer-tax collector who had been recommended by Walker, to serve as the county’s auditor-controller/treasurer-tax collector.
In accepting the post, Valdez said publicly that he was “very honored and humbled” for “this opportunity” and the “confidence” being shown in him. “As the auditor controller treasurer tax collector I will make sure that this department is run with integrity, with independent judgment, also making sure we run this department with clear transparency and efficiency,” said Valdez.
Since taking office, Valdez has consistently ducked invitations to discuss the propriety of having one individual hold the auditor-controller and treasurer-tax collector titles and exercising the authority those roles call for.
Last Wednesday, before the San Bernardino City Council, Dutton, in referencing the assessor’s office’s function, said, “I have found that people really don’t understand what the assessor does. We actually go back – the office of the assessor, not this one here in San Bernardino County, but historically we go back – to 6000 BC, to the days of the Pharaohs. As a matter of fact, Matthew the Apostle was actually a tax assessor.”
Dutton then spoke to the overlap of authority in such positions and the incompatibility of office issue represented by one individual carrying out interlocking governmental tasks. “As civilization moved forward, we discovered that it was probably not such a good idea that you have one person determining the value of property and who owned it and also be the same person who collects it – the taxes – and determines what the tax amount is.”
Dutton then expanded upon how giving one individual dual powerful roles in government can create a conflict of interest which redounds to the detriment of the community. “Back in those good old days, the tax collector used to actually get paid a percentage for every dollar they collected in taxes,” Dutton said. “Sometimes the sheriff was actually the tax collector. So there’s been a lot of changes in the history of the assessor’s office. Here in California in 1849, when we adopted our constitution, we separated the two functions and the office of the assessor is required by state law – the State Constitution – to be an elected position. They wanted to make sure the people have a voice, even though it was not directly tied to taxation. The bottom line comes down to the assessed value of property has a bearing on the amount of taxes you will pay in the way of property tax. The way I look at my job – my function – is to make sure we are not over-assessing people, that people aren’t being over-assessed and therefore being overtaxed.”
Dutton’s presentation followed Senator Morrell’s. Morrell’s comments, taken in isolation, did not seem to have any bearing on the county auitor-controller/treasurer-tax collector consolidation controversy. Nevertheless, viewed in the light of what Dutton had said and taking the senator’s comments into consideration with respect to the context of the expansion of governmental authority, Morrell’s statement in retrospect seems to have some relevancy to the issue.
“What is happening is government is continuing to expand and what that is doing essentially is taking our rights away as people,” said Morell. “We’re supposed to be a government of, for and by the people governed by consent. It is very dangerous because Sacramento is growing. We’re growing in debt in the wrong way – taxes, taxes and more taxes. Since we are governed by consent, we’re the first nation that no longer needs to bow a knee to a king. We have the ability to elect our own leaders, so we have to exercise our civic responsibility vigorously and upgrade those people we send to represent us. I’d like to suggest to you that we need to make sure our elected officials, including me, rank the citizen above the state and make sure we remind our politicians that they’re public servants and not masters, and they work for us.”
Neither Dutton nor Morell nor their staff spoke to whether they had coordinated their statements and whether members of the public were interpreting their statements accurately in inferring they were referencing the tangle of authority that exists in the auditor-controller/treasurer-tax collector position.
Mason this week told the Sentinel, “To understand the issues involved with having four roles in one position, start by considering the role of the auditor. An auditor’s job is to offer an opinion on financial statements as well as reviewing internal controls of financial transactions. The opinion states whether the financial statements reflect what really happened and whether the internal controls are adequate. They’re the last line of defense in financial matters. Treasurers and tax collectors create the internal controls and originate the financial transactions. What you have in essence with this position is the check and balance being the same person. It would be like getting rid of Congress and giving the president the power to write laws. Then he signs the law providing a check on his own power. The controller is responsible for oversight of everything financial. That would be like getting rid of the Supreme Court and giving that power to the president as well.”
Mason continued, “That being said, is it reasonably possible to achieve proper checks and balances? It is. The way to do it would be to have four separate people responsible for each function and to ensure proper separation of the departments into their individual roles. There should be physical and rules-based separation. For example, it shouldn’t be permissible for the auditor to date the treasurer. The elected auditor-controller/treasurer-tax collector should ensure that those separations are in place and provide oversight of each of the four individuals. Is that occurring? I have no idea, but I don’t have a high degree of confidence. I am running for the position in 2018 and that would be my first order of business.”

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