Auditor Hayes Nominated as State Treasurer

Gov. George Deukmejian surprised the political establishment Thursday by nominating an obscure legislative appointee, Auditor General Thomas W. Hayes, to be state treasurer.

Hayes, 42, not only has never run for elective office, he has never even been a member of a political party.

Hayes, always a “decline-to-state” voter--or independent--promised the governor he would register as a Republican and run for a full term as treasurer in 1990.

“Who?” asked Kathleen Brown, a probable Democratic candidate, when told of Hayes’ nomination. A member of the Los Angeles Board of Public Works, Brown is the sister of former Gov. Edmund G. Brown Jr.

Seen as a Cinch

The overriding factor in Deukmejian’s decision to nominate Hayes, it was learned, is that as a longtime, respected employee of the Legislature, he should be a cinch to win legislative confirmation--unlike the governor’s first choice, Rep. Daniel E. Lungren of Long Beach.

The Senate dealt Deukmejian an embarrassing political defeat last February when it narrowly rejected his nomination of Lungren after a protracted, bitter battle. The state Supreme Court later unanimously rejected Deukmejian’s contention that Lungren was entitled to take office anyway because one legislative house, the Assembly, had confirmed him.

“The governor doesn’t want to send somebody up who’s not going to be confirmed. He really doesn’t want to go through that again,” said one knowledgeable Republican, speaking on condition that he not be identified. “They (legislators) cannot not confirm their own auditor general who they themselves have appointed.”

For reasons he never has fully explained, even to his closest advisers, Deukmejian long ago ruled out nominating a legislator, even though he himself served in the Legislature for 16 years. So he nominated the next best thing--an appointee of the Legislature.

The governor, a grin on his face, announced his surprise selection at a hastily called afternoon press conference, praising Hayes as “a fiscal conservative, a man of integrity (who) knows state government inside and out . . . and is exceptionally well-qualified.”

Hayes, referring to Lungren’s initial nomination, told reporters: “I know that I was the second choice, but so is Avis. They try harder and so will I in the confirmation process.

‘Boring Is In’

“The auditor general is considered one of the most boring positions in state government,” Hayes continued. “But boring is in these days, I guess.” He obviously was referring to Deukmejian, who often tells “charisma” jokes on himself, and the governor joined others in laughter.

Hayes beat out 149 other applicants for the post of auditor general when the Legislature unanimously approved him for the job in 1979. He was the assistant auditor general before that.

The auditor general’s job is to review the financial performance and operation of all state agencies and departments, including the treasurer. The office conducts about 50 audits each year, about half called for in legislation and the remainder at the request of individual lawmakers.

The auditor general’s chief task, however, is the annual review of state government’s financial transactions, a function that is required by Washington as a condition for Sacramento receiving $10 billion annually in federal grants.

As auditor general, Hayes oversees a staff of 162 with an annual budget of nearly $10 million.

Oversees Billions

The state treasurer oversees billions of dollars in financial transactions, including bond sales and investments of surplus state money. For more than a year the treasurer’s office has been run by Elizabeth Whitney, top aide to Democratic Treasurer Jesse M. Unruh before his death on Aug. 4, 1987.

Unruh was able to build the post into a powerful political office from which to raise campaign money from financial institutions. Asked if he would accept campaign donations from people doing business with the state, Hayes said: “Yes, I would, but in no way would I ever let that influence my (official) decisions.”

Likewise, Hayes said, “I guess I would” accept honorariums--or outright gifts, usually in the form of speaking fees--”if I felt I could take them and not (let them) influence my decisions.”

The treasurer’s fund-raising ability was eroded somewhat in June when voters approved Proposition 73, a ballot initiative limiting campaign donations. Proposition 73 will restrict contributions to $1,000 per year from individuals, $2,500 from small political committees and $5,000 from broad-based political organizations.

Different Story

As a result, Hayes--if confirmed--will not be able to raise the huge donations from New York bond houses that routinely contributed $20,000 or more to Unruh’s campaign fund. By the time of his death, Unruh had amassed a political war chest of more than $1 million.

In choosing Hayes, Deukmejian rejected several Republican politicos who had been candidates for the post, including State Board of Equalization member Ernest J. Dronenburg Jr., San Diego banker/GOP fund-raiser Tom Stickel, former U.S. Treasurer Angela M. Buchanan and Los Angeles County Supervisor Pete Schabarum. Orange County Supervisor Gaddi Vasquez had been on Deukmejian’s “short list,” but recently told the governor he did not want to be considered.

Some Republican politicians privately criticized the governor for not rewarding a person with the coveted job who already has paid his party dues--if not a legislator, at least another officeholder or GOP activist.

“That’s something he’s going to have to deal with,” said one Deukmejian ally.

‘It’s Bizarre’

Another Republican said: “It’s bizarre. Republicans will react positively in public because of Hayes’ qualifications and because he is a decent, honorable man. Privately, they will react with furor because of the political disservice the governor has done to the party.”

Said another: “I’m flabbergasted. It’s kind of a slap at legislators. He’s saying to them, ‘You’re not good enough, but one of your employees is.’ ”

Senate Republican Leader Ken Maddy of Fresno, himself a candidate for the job last year, acknowledged, “It’s different. The governor surprised a lot of us the first go-around, and he surprised us again.”

But Maddy praised Hayes for his “strong background and strong credentials” and predicted he will be confirmed.

The nomination did draw generally favorable reaction in the Legislature, despite the lawmakers’ surprise.

Sen. Barry Keene (D-Benicia), who led the charge against Lungren, said he could not foresee anything that would result in a similar fight over Hayes. “On its face, the appointment looks good,” Keene said. “He’s not an outsider and he’s not a right-wing wacko.”

The Legislature has until Jan. 9 to confirm or reject Hayes. If it did not act, he could take office automatically.

Times staff writers Carl Ingram and Douglas Shuit contributed to this story.