SAN FRANCISCO - On Nov. 4 voters will decide between California's state controller, John Chiang, and former Public Utilities Commission President Greg Conlon in the election for state treasurer.
The winner will succeed Bill Lockyer, a Democrat, who is retiring from elected office at the end of his second term in January.
In June's primary election,
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Chiang, bearing Lockyer's endorsement, believes he has the best cumulative experience from his two terms as controller to address the responsibilities of the treasurer's office.
"I have a proven track record of putting California's finances on a strong track," Chiang said in an interview with The Bond Buyer. "Back in 2008-2009—and this was cited by the ratings agencies—our strong cash management skills kept California from defaulting on debt."
Conlon built an almost three-decade career at accounting firm Arthur Andersen LLP, rising to senior partner. He went on to serve on California's Public Utilities Commission and the California Transportation Commission.
"I've been on both sides of the fence," Conlon said. "I understand how government agencies work and I would feel very comfortable taking over the responsibilities of treasurer."
Chiang was elected controller in 2006, and re-elected in 2010.
Amidst the financial downturn, Standard & Poor's said the controller's "extraordinary cash management maneuvers" protected the state's priority payments.
Fitch Ratings also lauded Chiang for using "several strategies, including payment deferrals and IOUs, to ensure continuation of priority payments."
As controller, he has served on pension boards, bond issuance groups, and oversees pooled money accounts with the current treasurer, who said he's very confident Chiang will get the job.
"It's a different job — it's more investment banker rather than chief financial officer, so it does require kind of a shift in focus," Lockyer said. "But he knows a lot about the job of treasurer. I expect him to be an active, creative leader."
Chiang said he will aggressively work to create employment and economic opportunities in affordable housing, environmental technologies, or advanced transportation.
He said he wants to continue efforts to make the state government more transparent and accountable.
As controller, Chiang made a wide variety of the state's financial data available on the
"We're going to bring that type of transparency to the treasurer's office," Chiang said. "It will give the public, the decision-makers, the opportunity to make sounder financial decisions at an earlier time, which would obviously benefit the economy and the pocketbooks of individuals, families, businesses, and government."
Before he was elected controller, Chiang served two terms on the Board of Equalization, including three years as chair. He began his career as a tax law specialist with the Internal Revenue Service and previously served as an attorney in the controller's office.
"I was a high school mathlete, I was a finance undergraduate, and I love public service," Chiang said to explain his interest in the treasurer's office.
"It's an opportunity to make California a better place and to give Californians the best place to be to fulfill their dreams," he said. "We can't be a great state unless our finances are in order."
At Arthur Andersen, Conlon worked with corporations to streamline expenses and improve financial management, and performed financial audits.
Before that, he was an Air Force pilot for three years.
Conlon believes his private sector experience gives him an edge.
"It gives you a better perspective on how the real world works and I think that's something that needs to be realized," Conlon said in an interview.
He later was appointed by Gov. Pete Wilson to the California Public Utilities Commission, where he served as commissioner for four years and president for two years. He also spent two years on the California Transportation Commission.
Conlon said he would focus on keeping jobs in California, improving the state's credit rating, and addressing its unfunded pension liability.
He pointed to major companies like Toyota and Nissan leaving the state for more business-friendly environments. In the last fifteen years, Conlon says more than $28.1 billion of taxable income has left California for states like Nevada, Texas, Washington, and Arizona, which have lower or no income taxes.
Conlon also noted the state's reliance on personal income tax for a significant portion of revenues as another major problem—something the credit rating agencies have cited as a credit weakness.
The treasurer's office has no control over that area of policy, but Conlon said he has drafted a bill that would lower corporate taxes to 5% from 9% and repeal the personal income portion of Proposition 30.
That ballot measure, approved by state voters in 2012, implemented a seven-year increase in personal income tax rates on California residents with an annual income over $250,000. The measure also increased the state sales tax by 0.25% over four years.
Conlon's bill wouldn't change the sales tax.
"Even if I lose, I'm going to go up in January and get a couple of my brethren in both houses to see if they can help me get it into a committee," Conlon said. "The legislature has already recognized that something needed to happen with the entertainment industry—they increased the tax credit, which is the same as decreasing corporate tax."
Conlon said he would also tackle the state's unfunded pension liabilities by sitting down and negotiating with unions. If negotiations can't be reached, he would advocate going to new statewide plan for new teachers and state employees—similar to a 401(k).
"At Arthur Andersen I was taught to give back and get civically engaged," he said. "So I think it's instilled in me after those 30 years to keep giving back, and if I don't win this race, I'm not going to stop. I'll just keep trying to do things that I think need to be done."
Chiang has won the fundraising race, gathering almost $2 million in contributions from the beginning of 2014 through Oct. 18, according to campaign finance reports filed with the Secretary of State.
His campaign reports spending $573,000 this year, as his campaign war chest surpassed $3 million.
Conlon's campaign reported receiving $62,822 in 2014 through Oct. 18, and spending $63,087.
