A Laurel for Dusting off Fiorina’s Skeletons

Los Angeles Times and others' good work

California’s press may be shrinking, but it has done some great work this election cycle, adroitly guiding voters through a campaign season awash in money and stunts.

The Los Angeles Times today has at least three solid and deeply reported election stories worth a pat on the back: a sometimes choppily written but insightful profile of Barbara Boxer; Sacramento reporter Michael Mishak’s top-notch look at the role of Jerry Brown’s wife, Anne Gust, in her husband’s gubernatorial campaign; and my pick for best in show, this excellent walk through Carly Fiorina’s dirty HP laundry.

Reporter Scott Gold leads his piece, “HP benefited from state tax breaks while Fiorina was CEO,” with this:

Carly Fiorina, who is staking her U.S. Senate campaign on her corporate record, contends that California’s tax structure is hostile to business — one reason, she has said, that she was forced to outsource thousands of jobs when she ran Hewlett-Packard Co.

But while Fiorina was chief executive of the computer giant, the state was hospitable enough to grant the company a controversial $13-million tax refund even though, state officials said, it had already used credits to offset some income tax bills.

One of 21 firms that collectively received more than $80 million in sales tax refunds, HP was awarded $13 million in 2005, when the company posted net earnings of $2.5 billion. That year, California faced a $6-billion budget gap and slashed funding for public health programs, education and law enforcement.

It’s a measured yet damning indictment of HP’s behavior under Fiorina’s leadership. Gold ferrets out troubling hypocrisy as well as red-alert conflicts of interest.

In asking for the rebates, the companies cited provisions of a law that state officials said were designed to encourage small start-ups to invest in manufacturing equipment. Hewlett-Packard bills itself as the world’s largest technology company.

A state tax board — four of whose members had received political contributions from companies including HP — agreed with the firms, overruling the advice of its own staff.

Tax records are not made public and therefore cannot be used to demonstrate that HP employed tax credits to erase its state income tax liability. But state finance authorities said the companies sought the refunds after they had already “zeroed out” their state income tax bills; one board member confirmed that on the day of the vote. Many technology companies use research and development tax credits, among the more generous business incentives offered in California, to do so.

He then gets into the nitty-gritty, following the money and giving some nice pushback:

Fiorina spokeswoman Julie Soderlund said in an e-mail that “HP followed the tax laws of the state of California and was subject to the decisions made by the state’s leaders…. California was, and continues to rank at the bottom of states to do business in for many reasons, including its tax and regulatory structure.”

HP officials declined to comment for this article. In years before the vote, Hewlett-Packard made $20,000 in political donations to the four members of the five-member Board of Equalization who approved the tax relief, according to campaign records filed with the state. The board acts as a jury of sorts in state tax disputes.

Three of those members — then-chairman John Chiang, who is now California’s controller; then-Controller Steve Westly; and former legislator Bill Leonard — said the donations had no bearing on their votes. The fourth, Claude Parrish, could not be reached for comment. The fifth, Betty Yee, abstained from the vote and said this week that she had been “disappointed” by her colleagues’ decision.

Soderlund’s statement did not address questions about the donations.

Great stuff.

It would be remiss of me to discuss the good work coming out of California today without pointing to Calbuzz’s brilliant breakdown of the latest survey from the Public Policy Institute of California. If there is a smarter poll analysis out there, I haven’t seen it. Jerry Roberts and Phil Trounstine’s rigorously account for the trends the poll shows—read: good news for Dems—and pick through the polling methodology. Tame, smart, and presented with a refreshing lack of disaster movie metaphors. If you’re going to do the horse race thing, this is how it should be done.

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Joel Meares is a former CJR assistant editor.