CALIFORNIA ELECTIONS / TREASURER : Candidates Differ on State of Bond Program

Republican and Democratic candidates for treasurer campaigned a block apart Thursday and revealed sharply differing views on the health of the state’s multibillion-dollar bond program.

Kathleen Brown, the Democratic nominee who is challenging Republican incumbent Thomas W. Hayes, started a barbed exchange by spearheading a legislative resolution that would create a state commission to delve into the growing backlog of bonds that have been approved by voters but not yet issued by the treasurer’s office.

The proposed seven-member commission, led by the treasurer, would review the bond program and recommend to the governor and Legislature a prudent level of bonded indebtedness.

Before Tuesday’s vote, the backlog was $6.5 billion to $7 billion. Voters in the primary election approved an additional $5.1 billion in new bonds, leaving the backlog in the range of $12 billion. Brown said that amount is unacceptable.

Brown, a Los Angeles attorney who specializes in corporate law and public finance, said the commission is needed to “help unsnarl the bond logjam.”

She noted that voters on Tuesday approved Proposition 123, an $800-million school construction bond measure. But she said that even before the vote the treasurer’s office was waiting to sell $2 billion in school construction bonds approved in earlier elections.

“I do not think you put these bonds on the ballot and then walk away from them,” Brown said. “Voters pass these bonds, and then when they don’t see anything done, they react with frustration and cynicism.”

Hayes, after attending a Republican victory party, said testily: “I’ve sold every bond that has come across my desk. There is not one project that has gone wanting for funds in this state.”

Hayes contends that the backlog has grown for a variety of reasons, including federal legal requirements, the needs of state agencies, interest rates and the ability of the financial community to absorb California’s huge bond offerings.

He said that if all of the bonds that have been approved by voters were sold tomorrow, which is legally impossible, the governor and Legislature would have to come up with an additional $1 billion in the state budget to keep up with principal and interest payments.

“I want to know--what does Kathy want to do?” he said.

Brown, responding, said: “It is not the treasurer’s job to step on the prerogatives of the governor or the Legislature and recommend what programs should be cut or what tax policy should be.”

Hayes said he and Brown have another “clear, philosophical” difference over the degree that the state should get involved in running corporate affairs.

Last week, Brown said the treasurer should be more aggressive in using his seat on the governing board of the California Public Employees Retirement System.

Specifically, she criticized a vote of the retirement system board supporting a plan by executives of General Motors that will enrich the retirement income of retired GM executives. Brown said the proposal will cost General Motors shareholders $42 million. As holders of 6.2 million shares in GM, Brown said the California Public Employees Retirement System board should have opposed the expanded pension plan.

Hayes, responding Thursday, said he disagrees with Brown “emphatically.”

“You don’t get involved in the day-to-day management of organizations. That is not an appropriate role for government--to be telling the private sector how to do its business.”