Bid for State Treasurer May Be Key GOP Fight

Newly anointed Republican Thomas W. Hayes hardly had a chance to savor being appointed state treasurer when he found himself facing the ugly prospect of a tough primary election challenge from a well-connected conservative.

A mild-mannered fellow who is more comfortable talking about managing the state’s money than talking about politics, Hayes, 43, was appointed by Gov. George Deukmejian last year to succeed the late Democrat Jesse M. Unruh.

As the state’s nonpartisan auditor general, Hayes had declined to state a party preference on his voter registration. But after his appointment as treasurer won approval from the Democratic-controlled Legislature, Hayes registered as a Republican, giving the GOP control over a second statewide elective office.

Hayes’ appointment was seen as a chance for Deukmejian to boost Republican hopes of building a bench of future political stars.

But now it appears that Hayes will have to wage an aggressive and costly campaign just to survive the 1990 GOP primary. His opponent is Angela Bay Buchanan, 40, a conservative former U.S. treasurer whose view of the state treasurer’s job does not appear to differ much from Hayes but who has considerably more experience in politics than Hayes.

The state treasurer invests California’s $18-billion portfolio, borrows money and sits on numerous boards that deal with money management, including the one that controls the $75 billion in retirement funds for teachers and other public employees.

The job became much more political under Unruh as he rewarded friends with business and shut out foes in much the same way he ran the California Assembly as Speaker in the early 1960s.

This time around, the fight for state treasurer is drawing interest because it could launch new political careers. And for California Republicans, who may not have a gubernatorial primary next year, the treasurer’s race could reveal the center of gravity in the party in the post-Ronald Reagan era.

Since Reagan’s rise in the 1960s, the state party has been influential in the national GOP’s conservative wing. But it also has a thriving moderate wing, one that is led by corporate captains from Orange County to the Silicon Valley.

Since 1980, about all the two groups could agree on was that Reagan should be President and, with more mixed feelings, that Deukmejian should be governor (the conservatives originally backed former Lt. Gov. Mike Curb in the 1982 primary).

The two wings could not agree in 1986 on a U.S. Senate candidate: Most of the conservatives backed Los Angeles TV commentator Bruce Herschensohn, while the moderates wanted former Rep. Ed Zschau of Northern California.

Zschau edged Herschensohn when some of the conservative votes went to candidates other than Herschensohn. In the general election, Zschau tried in vain to excite the conservatives and lost to Democratic U.S. Sen. Alan Cranston by 100,000 votes.

Broad Appeal

Deukmejian believes Hayes can appeal to both wings.

The corporate types are expected to like Hayes because of his business and banking expertise, and two items on Hayes’ resume should appeal to conservatives: The son of an Air Force general, Hayes is a proud ex-Marine who served in Vietnam; he is also a fiscal conservative who is wary of depending too heavily on bond offerings to finance state projects.

But Buchanan and some other Republicans were furious when Deukmejian appointed Hayes. They noted that Hayes was not even a registered Republican until his confirmation. Hayes says he declined to state a party preference because the auditor general has to monitor programs of both parties.

Some conservatives fear Hayes could have Zschau’s problems in energizing the GOP base in conservative Orange County in a general election.

Moreover, Hayes’ detractors don’t think he has enough political experience to survive the 1990 general election campaign. Many political professionals expect the Democrats to nominate Los Angeles Board of Public Works member Kathleen Brown, whose family has already produced two California governors, Edmund G. (Pat) Brown Sr. and Edmund G. (Jerry) Brown Jr.

“I just think I will be a stronger candidate against Kathleen Brown than Tom Hayes will,” Buchanan said last week in Burbank as Brown announced her candidacy for treasurer. “I have a base (with conservatives) and I can excite Republican voters.”

‘It Strengthens the Party’

As for hurting the GOP by challenging Hayes, Buchanan replied: “I happen to believe in the primary system. I think it strengthens the party.”

The Democrats, of course, are gleeful at the prospect of a divisive GOP primary.

“I’ll bet Buchanan mops the floor with Hayes,” said Democratic operative J. J. Kaplan, an aide to state Senate President Pro Tem David A. Roberti. “But even if she doesn’t, she’ll set Hayes up for a knockout by Kathleen (Brown).”

There’s no question that Buchanan will be a tough opponent for Hayes if her conservative connections--many of them in Washington--can help her raise the $1.5 million she thinks she will need to win the primary.

Buchanan’s straightforward conservative views on everything from social issues to foreign policy can bring conservatives to their feet at political rallies.

And while Hayes tries to have something nice to say about everybody, Buchanan loves to mix it up.

The other day, for example, she was asked if she thought Kathleen Brown was secretly hoping that a conservative ideologue would be the GOP nominee for treasurer.

Buchanan shot back: “She may want to discuss that with her father, who was delighted when Ronald Reagan entered the 1966 governor’s primary.”

Pat Brown has acknowledged for years that he badly miscalculated in 1966 when he talked openly of his hope that Reagan would be his challenger. Reagan turned Brown out of the governor’s office by a million-vote margin.

Buchanan also has no patience for those who say she is taking on the California GOP Establishment by opposing Hayes.

Member of the Establishment

“What are they talking about?” she asked the other day. “The conservatives are the mainstream of the party. Ronald Reagan is the Establishment, for heaven’s sake. And I have been with Ronald Reagan for 12 years. He appointed me U.S. treasurer.”

As for her view of the state treasurer’s job, Buchanan keeps it simple, if somewhat vague: “I think it is the treasurer’s duty to be the taxpayer’s watchdog. I want the taxpayers to be sure there is someone in Sacramento concerned at all times about their money.”

But if Buchanan--or Kathleen Brown, for that matter--is sizing up Hayes as an easy mark in the state treasurer’s race, they may be in for a surprise.

He isn’t kidding when he says he can invest and manage the state’s $18-billion portfolio himself rather than depending, as Unruh did, on aides to do it.

Hayes stunned state treasury employees when he began showing up at 7 a.m. to help them place the calls to brokerage houses and banks that invest an average of $500 million a day.

Different Style

He also had a rude surprise for the underwriting teams at various financial houses who were accustomed to having business tossed their way by Unruh.

Hayes instituted a competitive bidding process for the bond underwriting business and canceled the lavish dinner parties and limousine services that marked some of Unruh’s dealings with the underwriters.

Hayes said last week that on a recent bond refunding of water resources projects, his office saved the state almost $1 million in fees paid to the underwriters by forcing them to compete for the work.

He acknowledges that he knows little about political campaigning. And while he is hardly a charismatic speaker, he is getting better at it.

The other day, for example, he drew frequent laughter and applause at a luncheon in Sacramento sponsored by the California Manufacturers Assn.

And he may have the best campaign message of all: “I’m not a politician.”

“I plan to run and I plan to win,” Hayes told the Sacramento luncheon. “But when you go to the polls you will be able to choose between a financial manager with no political experience like myself, or a politician without any financial management experience. It’s your money and your choice.”

That line was aimed more at Brown than at Buchanan, who can cite her experience as U.S. treasurer.

Deukmejian’s Support

But as for Buchanan’s charge that Hayes has no base within the Republican Party, Hayes says evenly, “My base is the people who are interested in how their money is managed. And listen, George Deukmejian, the leader of the Republican Party in California, asked me to serve in this job. He was satisfied with my Republican credentials.”

Although Hayes projects a conscientious, almost scholarly air, he is trying to loosen up a bit. But sometimes it’s hard.

The other day his chief deputy, B. T. Collins, was watching as Hayes worked away on the telephones investing the state’s money.

“Oh, who cares,” jested Collins, a popular GOP dinner speaker. “Tom’s got the job for another two years and if he loses we’ll just take all the money and go to Nicaragua.”

Hayes saw a reporter take note of that remark and shot Collins a look that was unmistakable: “Not funny, B.T.”