Trusted Unruh Aide Steps In as Acting Treasurer

Until a new, appointed state treasurer takes over the office left vacant by the death of Jesse M. Unruh, the acting treasurer of California will be Elizabeth Whitney, Unruh’s top deputy.

On Wednesday, Whitney, 33, began presiding over an investment portfolio worth $19 billion and serving on 40 boards and commissions that determine the fate of billions of dollars in municipal bonds and set investment policy for public employee pension funds.

One of Unruh’s most trusted lieutenants, Whitney, 33, has pledged to run the treasurer’s office, which under Unruh became a center of power in state government, just as her boss would have wanted.

Unruh died Tuesday night at his Marina del Rey home after battling a recurrence of prostate cancer first diagnosed in 1983.

“We’re doing what Jesse wants us to do, getting business done,” Whitney said in an interview. “That is the best tribute we can pay him at the moment.”

Appointed by Governor

Gov. George Deukmejian, who was expected to remain out of state on a family vacation until Aug. 15, is empowered to appoint a new treasurer, subject to a possible veto by both houses of the Legislature. Deukmejian’s staff insists that he has not considered a successor--despite several weeks of rumors correctly suggesting that Unruh was terminally ill--because to do so would have been “in poor taste.”

“I can tell you unequivocally that there has been absolutely no discussion of this subject,” said Deukmejian press secretary Kevin Brett.

Under law, the governor picks a successor when any of the other state officers dies or leaves office in the middle of a term. However, the state Constitution gives the Legislature a role in the appointment. The appointee assumes office as soon as both the state Senate and Assembly confirm the governor’s choice, or after 90 days. However, if both houses reject the candidate, the governor must select someone else.

Influenced by Democrat Strength

Because of that legislative power, Republican Deukmejian will have to choose very carefully before sending the nomination to the Democrat-controlled Legislature, according to a longtime Deukmejian adviser.

“He can pick someone close to him . . . a potential heir who might later be elected governor, or, recognizing that the person has got to be confirmed, he can go with an individual who is more a caretaker,” he said.

Depending on the governor’s choice, the appointment process could drag on for months, leaving Whitney in charge of an office of 300 employees and an operation that invests between $500 million and $700 million in public funds every day.

In recent years, Whitney has often substituted for Unruh, chairing boards that supervise the sale of state and local government bonds issued to pay for new prisons, hospitals, housing, university buildings and pollution control equipment.

Late last month, Whitney accompanied state Finance Director Jesse R. Huff to New York to arrange the sale of $800 million in short-term notes for the state.

As with many of the treasurer’s duties, Unruh did not have to be personally present to complete the financial deal, which helps keep cash levels up in the state treasury during the months when the flow of tax revenue is at its lowest.

But because of Unruh’s death, the notes had to be reprinted so that they would bear the signature of acting treasurer Whitney, rather than Unruh, who died before the sale was formally completed.

Whitney, who worked for Unruh for almost 10 years, was present when the one-time Assembly Speaker and unsuccessful candidate for governor turned an obscure statewide office into a position of influence in state and national affairs.

It is not clear whether Unruh’s successor will wield as much clout--whether the power of the office is inherent in its expanded role or was an outgrowth of Unruh’s magnetic (some would say domineering) personality.

“A lot of (the importance of the office) was because of who Jesse was,” Whitney said.

In the past, other Unruh associates boasted that he could dominate any board that he served on, including the boards of the state teachers’ and public employees’ pension funds, with assets of more than $65 billion, even though he held only a single vote.

However, other observers say that the position of treasurer has changed in an era when local and state governments in California are more and more dependent on bond sales to finance needed public works projects and private developments.

Unruh “made it the important constitutional office that it should be,” said a prominent California investment banker who has worked closely with the state treasurer’s office. “I can’t see it going back to the sleepy-time, down-South office it was before Unruh.”

As chief deputy treasurer and a frequent stand-in for Unruh on boards and commissions, Whitney earned a reputation as a tough, sometimes abrasive, executor of Unruh’s policies. Her defenders describe her as intelligent and effective, someone who has successfully carried out her duties under tight deadline pressures.

She appeared to have Unruh’s total confidence and was one of his closest associates. She is one of several friends and family members who are trustees for Unruh’s campaign committee, which will decide how to dispose of more than $1 million in funds left in his campaign treasury.

But some in the investment banking community complain that she can be ruthless and arbitrary, lashing out at those who cross her.

However, much of the business of the treasurer’s office is routine and will be carried out by civil servants and a small cadre of Unruh appointees, who will continue to carry out their responsibilities as they have in the past, according to Whitney.

The death of Unruh, often regarded as the most powerful Assembly Speaker in California history, produced an outpouring of sentiment Wednesday that ranged from the White House to Sacramento, much of it from men who had been his political adversaries.

He was remembered by President Reagan as a man who “brought a deep and abiding dedication to the causes in which he believed.”

Unruh had opposed Reagan when the Republican governor ran for a second term in 1970.

Deukmejian called Unruh “a great leader . . . and a friend. . . .”

“He loved politics and raised it to an art form,” the governor said.

The current Assembly Speaker, Willie Brown (D-San Francisco), said California “has lost a loyal servant . . . the modern California Legislature its father.”

These and other expressions of regret from Atty. Gen. John K. Van de Kamp and state Senate President Pro Tem David A. Roberti (D-Los Angeles), among others, all took note of Unruh as a man of many accomplishments.