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California Treasurer John Chiang on why he should be the next governor

John Chiang, controller for the state of California.
Bloomberg/Bloomberg via Getty Images
John Chiang, former controller and current treasurer for the state of California.

California State Treasurer John Chiang has been described as the less flashy candidate in the race to fill Gov. Jerry Brown's seat. Here's why he thinks he deserves voters' consideration.

California State Treasurer John Chiang has been described as the less flashy candidate in the race to fill Gov. Jerry Brown's seat.

But as reported in the Orange County Register, he's also known for being tough. As former state controller, Chiang enforced rules to dock lawmakers' pay unless the state budget was balanced and received on deadline. Now, he's running as a Democrat for the governor's seat, and his campaign, which had a slow start, is picking up steam. The Los Angeles Times reported earlier this month that Chiang's finance reports showed that his fundraising efforts were gaining on Democratic rival, Lt. Gov. Gavin Newsom.

So what are Chiang's plans for California? The gubernatorial candidate spoke to Larry Mantle. The interview that follows has been edited slightly for clarity.

Why have you decided to run? What do you bring to this office?

I love California. California is an incredibly special place, so we’ve made a dramatic turnaround in this past decade in our economic performance. I want to be a state of great passion and compassion and because of my background, I want to make sure that we’re fiscally responsible. We’re the state of aspirations but we also have to be the state that's also realistic. We have to have our feet in the ground. I want to make sure that in this era of President Trump, that we take a different road. If we follow the pathway of Washington D.C., we’re not going to continue to lead America in its economic recovery.

Gov. Brown has positioned himself as philosophically aligned with the Democratic majority in Legislature but also as the brakes on state spending matters. Where would you put yourself, fiscally, compared to the governor?

I believe in strong fiscal responsibility but I also believe in strong investment. We have to invest in our infrastructure, we have to invest in education, in 21st Century jobs. I want to make sure that we’re smart with our money. I understand it’s a limited resource, so we want to make sure that we optimize the value of the dollars that we’re using. But I also believe in a rainy day fund. I was advocating for a rainy day fund when Gov. Schwarzenegger was holding the top position of the state. I made the very difficult decisions in 2009 to hold back tax refunds — not popular, but I didn’t have the dollar as the state treasurer. I had to issue IOU’s, but today, California is improving economically, we’re being recognized for better financial performance, and I want to make sure that this is the state of fiscal discipline.

One of our biggest battles is over environmental regulation. Much of the business community believes the California Environmental Quality Act is an impediment to needed development. Environmentalists believe CEQA is essential and has worked effectively to protect the interests of habitat and communities in the state. Where do you stand?

We have to have smart, balanced approach. A clean, green economy is critical. .. We have to be smart to make sure that we can have practical application of environmental laws of the state. We want to continue to grow businesses, so not only grow these businesses, to make sure that they understand what the clear rules are. I want to help them through the financing. I want to create more Teslas. We have tremendous automobile design companies here in Southern California. Clean energy. So I want to do both.

So does it need to be reformed?

I want to certainly look at it. I want to take into account all the environmental considerations. But let’s try to move the process so we can get clarity as to decisions.

Looking at Brown’s May budget revision, do you take issue with any of the priorities that are encompassed there?

I think the governor is spot on in regards to making sure that when we identify that because of what’s happening with the stock market, and the possibility of increased capital gains, that we put a large portion of the additional revenues into education. We know that the education community in this state has suffered dramatically during that last recession. They’ve made tremendous progress, but look who bore the brunt. Middle class and lower-income families, especially, bore the brunt. That 10-year period around that last recession, we increased tuition on community college students by 130 percent. On UC and Cal State students we increased tuition and fees by 113 percent. We can’t continue to put that next generation into massive debt so I like the idea that we’re investing in education.

California is positioning itself as the ‘anti-Trump’ and trying to fight the president in numerous ways. Do you support that effort?

This is my motto: Assist where we can, resist when we must. And unfortunately, most of it has been resisting. When you look at President Trump’s policies on health care, we had millions of Californians and Americans being impacted by devastating increase in inflation and costs for health care. We had American families filing for bankruptcy because they simply couldn’t afford the care. Prescription drugs too expensive. Hospitalization too expensive, not enough insurance coverage. So the Affordable Care Act brought in millions of Californians to coverage. The fact that President Trump and Congress want to repeal that protection for Californians puts millions of them in harm’s way. So I support the effort to challenge President Trump and Congress on people’s access to high and affordable health care coverage… President Trump needs to understand this is a very different state and let California be.

Audience question: Do you support free community college in California — free for all?

I want to move us to that place… But it’s not just free. We want to make sure that people are on the pathway to graduating on time, that they’re participating — making sure they’re going to classes. If there’s some type of work study program, and then they get that difference made up. So I want to make sure that we bring all those factors into place and making sure that every child — right, you work hard, you get access — we’re going to make sure you can graduate from college.

If Medi-Cal’s expansion is defunded by the federal government and the state couldn’t pick up that cost, how would you deal with that?

It would be incredibly traumatic. We’re going to have to try new methodologies. If we have the full repeal of the Affordable Care Act, we’re looking at a loss of about $20 billion. If you add in the portion covered by Covered California, we’re looking at a couple more billion. There was a study done, we’re looking at a loss of 209,000 jobs, here in California. And when you think we lost 1.34 million jobs and recovered 2.4 million jobs, it has a powerful negative effect on California’s economy. We’re going to do what I have always done in my prior offices. We’re going review thoroughly what funds are available to figure out what types of coverage that we can continue to cover. We’re going to have to make some tough choices. Are we going to take away health care from kids — especially neo-natal? Are we going to take away assistance from seniors who need life-saving treatment? This is going to be very, very painful, should “Trumpcare” and what happens in Washington, D.C. prevail.

Audience question: Who did you support in the Democratic primary and why?

I supported Hillary Clinton. I thought she brought great expertise and knowledge and knew how the process worked. I liked a lot of the positive things that Bernie Sanders was offering, but I just thought the experience, the knowledge and the know-how gave the nod to Hillary.

Where do you place yourself ideologically through the prism of those two candidates?

I am a pragmatic progressive who’s fiscally responsible.

Audience question: You cut off the Legislature’s paychecks when they couldn’t pass the budget on time. Take us back to that decision. Some people were critical of that, particularly in Sacramento, who thought you were grandstanding. Others were highly supportive. In hindsight, do you think you did the right thing?

I absolutely did the right thing. I put Californians first. California before Sacramento. No disrespect to my colleagues in Sacramento, but every day Californians were sick and tired of the fact that we had late, unbalanced budgets. They were paying the price. Health care providers, other people who are services — the education community, state employees who weren’t going to get paid. We have to make sure that we in public service, we in public leadership, do the right thing, so that we don’t negatively impact people… So when they passed another phony budget, I said, “That’s it.” Voters had just passed Proposition 25. I was going to try and make sure that we enforce the voters will. And so I was happy to do so on behalf of California voters.

If you were to reform California’s tax system, how would you do it?

I would try and have it more balanced. If you look at the old, traditional theory of taxes, you try to have it balanced between property taxes, sales taxes and income taxes. A few years ago, Gov. Schwarzenegger changed something very dramatically — he had the Vehicle License Fee repealed — the $4 billion loss in revenues. And what people didn’t understand: basically, it was going to go somewhere else. So we shifted it to personal income taxes. One of the thing we have to understand going forward is that we’re smart about tax policy, and we’re doing the right thing today. When you have good years, you want to set aside some of that money, because we know that humans haven’t eliminated the business cycle, we haven’t eliminated the monetary cycle, and so at any point could be some shock, could be some bubble. Those revenues are going to drop, and if we have those drop of revenues, the governor estimated a loss of $50-plus billion over a three-year period of time.

Audience question: Do you still support the high-speed rail project?

I support modes of transportation including high-speed rail. I think it’s important that we find private funding for high-speed rail. This is a state of 39-plus million people. We need all types of opportunities, alternative types of transportation.

Is it realistic that you get enough private funding to come in and close the gap on the high-speed rail project?

We’re going to have to check and make it work.

Audience question: How would you deal with the two big public employee pension programs — CalPERS and CalSTERS — and their overburdened obligations?

So I think if you checked some of the reports from the governor’s budget, the governor and I came up with an idea. We have this fund on the side called the “Surplus Money Investment Fund.” That money today is earning about 88 basis points, a little less than 1 percent. We thought, “Why don’t we take some of that money, $6 billion, put it into CalPERS, and over the next 20 years if we hit our normal investment rate of return, we can generate an additional $11 billion.” It’s a smart way to use money, so that sort of reflects who I am, sitting in the financial offices — new, creative ideas to try to take on big obligations such as infrastructure, health care, pensions.

Audience question: How would you differentiate your views from the perceived Democratic front runner, Gavin Newsom?

I would talk about achievement. Look at the past eight years. Look at the financial crisis, what we’re talking about. Who had the ideas and who actually got us through that financial crisis? Who do you trust? Whose actions do you witness? And clearly, huge financial performance difference. When I was standing up, acting, speaking out, I think I was in that rare company — I was that one Democrat standing up against what was happening in Sacramento. I think that’s a clear indication of different type of independent, strong, positive leadership for all Californians.

So you’re emphasizing your experiences and actions. Do you have ideological differences with the former San Francisco mayor, now lieutenant governor?

I don’t want to speak for them. I just haven’t heard their actions on housing. So I’ve made that a priority. Job creation — I’ve made that a priority. They need to indicate what they’re going to do on that particular front.

Audience question: When Californians pass a tax for a targeted purpose, will you honor our votes or allow funds to be redirected into the general fund as has happened in the past?

I’ve been a strong proponent of accountability and transparency. From the very beginning, when I was the controller, I started posting the state’s information on revenues, disbursements, cash position. When the voters passed Proposition 30, the tax, I told the voters of California I’m going to create a website to show how those moneys are being used, as promised for education. It was supposed to be used in classrooms. If you go onto the controller’s website, and I’m no longer the controller, you can go check to see for a particular school district, how those moneys are used. Today, as the state treasurer, I post debt. Over the last 30 years, all levels of state government and local government in California, we have borrowed $1.5 trillion. I’m showing how those dollars are being used.

But as governor, would you stop redirecting funds for a targeted purpose — would you stop those being raided and put in the general fund?

Absolutely, yes. If you make a promise, you have to keep a promise.

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