SACRAMENTO — When California companies feel squeezed by their state tax bill, Bill Leonard may be able to help: He is an elected member of a powerful board that can slash a corporation's taxes by millions.
Leonard, who often votes with business interests, can't accept much support from them at election time because of a $250 limit on donations to the board's members. But businesses pump hundreds of thousands of dollars into a tiny Sacramento-area nonprofit where Leonard's wife and his chief deputy both draw income.
Pacific Gas & Electric, Eli Lilly and Co., Amgen, the manufacturing lobby, distillers of alcoholic beverages and other businesses with multimillion-dollar matters before the Board of Equalization all have donated. A chunk of the money has been used to pay Leonard's wife and his deputy to organize an annual gathering of lawmakers, lobbyists and their families at a luxury resort in Maui. This year's event, which Leonard attended, wrapped up Friday.
"This seems like a way for large corporations to launder contributions to a member of the board," said Lenny Goldberg, president of Californians for Tax Reform.
"It is improper and it should be illegal."
Leonard, the only Board of Equalization member at this year's conference, said he saw no problem with tens of thousands of dollars in corporate money going to his family's bank account. The San Bernardino Republican says his wife, Sherry, has a right to earn a living.
"If a company wants to be inappropriate and come to me and say, 'I helped your wife's business, and by the way we have a tax matter coming up,' I would throw them out of my office," Leonard said. "I can't imagine something like that happening. . . . Just because I chose to run for public office, is my wife forced to be a homemaker?"
Leonard's deputy, Barbara Alby, and Sherry Leonard shared payments totaling $77,000 for organizing the Maui conference in 2005 and 2006, public tax records show. They will be paid roughly $40,000 for arranging the event -- the sole function of their foundation -- this year.
Alby said there was nothing wrong with sitting on the board of a group that solicits money from companies with business before her office.
Alby said she and Sherry Leonard are not directly involved in asking for donations, a task she said is handled by the other three directors of the nonprofit, the Pacific Policy Research Foundation. Alby and Sherry Leonard complete the foundation's five-member board.
"I don't know where the conflict is," Alby said.
The former state senator who wrote the ethics laws that govern the Board of Equalization sees things differently.
"These board members are like judges," said Quentin Kopp, now a retired judge. "I can't imagine a judge presiding over a trial in which one of the parties was making these kind of payments."
The law requires board members to recuse themselves from tax appeals involving any donor that has given them more than $250 in campaign money, or to return the contribution. Kopp said he regrets that the law he drafted does not apply to family or staff income derived from interests with matters before the board.
"I didn't include it, but I wish I had," he said.
Kopp says holding board members to strict ethical standards is important because the stakes are high. The value of property owned by Pacific Gas & Electric Co., for example, is calculated each year by the board and is the basis for its tax bills. As a Board of Equalization member, Leonard, who is also a former legislator, votes on the size of those valuations.
PG&E paid $15,000 to the nonprofit in 2006 and $15,000 this year. Such donations cover the cost of bringing panelists to the conference and renting facilities, in addition to paying Alby and Sherry Leonard.
PG&E sent a senior government-affairs employee to the Maui conference last week, said spokeswoman Darlene Chiu.
"This foundation provides a forum and addresses issues that PG&E is interested in," Chiu said.
PG&E disclosed its contribution in a public filing, but the Pacific Policy Research Foundation declined to disclose its donors, and state law does not require it to do so.
The Times learned of other donors through interviews with participants in this year's Maui event, held at the beachfront Fairmont Kea Lani in upscale Wailea. Company representatives who attended were required to make a contribution to the foundation of at least $5,000, in addition to covering their own expenses for the trip, according to the nonprofit's president, Tom Bordonaro, who served in the Legislature with Leonard.
Among the firms that did so was liquor company Diageo, which had much at stake in the Board of Equalization's August decision to raise taxes on flavored alcohol drinks, such as the company's Smirnoff Ice. The board increased the tax from 2 cents to 31 cents per bottle; Leonard, breaking with the majority to side with liquor companies, voted against the tax.
