2 Republicans Vie to Challenge State Treasurer

Republican P. Gregory Conlon has what might be the perfect resume to run for state treasurer--if only he could roll back the clock about two years.

A former president of the California Public Utilities Commission, Conlon was one of the architects of the state’s energy deregulation scheme, hailed at the time but widely viewed now as a costly train wreck. Before that, he spent 30 years with Arthur Andersen--that’s right, the accounting firm at the center of the Enron financial scandal.

Conlon’s chief opponent, former state Deputy Treasurer Mary Toman, contends that Conlon’s resume is so politically radioactive that worried Republican Party activists recruited her on the final day to file for office, when they realized he would face no opposition in Tuesday’s primary.

Conlon calls that hogwash, and says that although his background might now be regarded as a political liability, it also gives him the experience needed to take on incumbent Democrat Phil Angelides, who is sitting on a heap of campaign cash, more than $4.2 million.

“I think I have the chutzpah to take him on,” Conlon, 68, said. “I think I can raise the money to do it. A lot of people now are sitting on the sidelines, but after next month, they are going to help me take him on.”

Regardless of who wins the primary, Angelides is considered a heavy favorite in November, even though his role in the energy crisis--particularly a $4.3-billion loan that he executed to pay for power but that went sour--has opened him up to criticism. Both GOP candidates are already trying to seize on the opening, accusing Angelides of mismanaging the state’s finances during the power crunch.

“Phil Angelides is a land speculator. He does not have the background needed to serve as treasurer, which is all about being a conservative steward of the state’s money,” said Toman, 47, who was a deputy in the U.S. Commerce Department under former President Bush and is now head of the Republican Party’s Los Angeles County chapter. Toman is also trying to paint Angelides as a habitual fund-raiser in the Gov. Gray Davis mold.

Cathy Calfo, a treasurer’s aide who is on a leave to run Angelides’ reelection campaign, says the former California Democratic Party chairman and Sacramento real estate developer is prepared for any challenge. Angelides is running unopposed in the primary, along with Libertarian Marian Smithson, Green candidate Jeanne-Marie Rosenmeier, American Independent Nathan E. Johnson and Natural Law candidate Sylvia Valentine.

“He has been nationally recognized for his leadership on fiscal issues and has worked hard to get good rates on investments,” Calfo said of Angelides. “He really believes that as treasurer his responsibility is to be a fiscal watchdog, and that is what he has done.”

Like most statewide offices, the treasurer’s position attracts little notice outside Sacramento. But treasurers wield considerable clout.

The treasurer acts as the state’s chief banker, frequently orchestrating billion-dollar loans and bond deals to finance state projects. The treasurer also oversees a variety of powerful but little-noticed financial committees and sits on the board of the state’s gargantuan pension funds for state employees and teachers, CalPERS and CalSTRS. The job pays $140,000 a year.

Neither of the GOP candidates has raised much money--both have run low-key campaigns financed largely by their own bank accounts--and they’ve both secured their share of endorsements, with Assembly Republican Leader Dave Cox backing Conlon and former Treasurer Matt Fong backing Toman.

Toman has a master’s degree in business from Harvard, served as a deputy under Fong and spent time as his representative on the pension boards. She says she is the only candidate with the financial background needed to earn respect on Wall Street.

Toman says the treasurer’s office is in serious need of structural change, and that many on staff there need enhanced training if they are to have a fighting chance of securing good investment rates from New York banks. Conlon, she says, simply has too much political baggage to make a serious run at Angelides. And she believes his stubborn adherence to deregulation illustrates a refusal to admit a mistake that makes him unfit to serve as treasurer.

“I have the best skills and background to be treasurer. I have already been a deputy in that office,” Toman said. “The state is in a fiscal mess, and I have detailed plans for how to work on PERS and STRS and deal with the cash management area of the office.”

Conlon, a former military pilot who also served on the California Transportation Commission in addition to his time on the PUC, recently obtained a law degree from the University of San Francisco at an age when many are retired.

He said he was moved to run for treasurer last year when he saw Angelides push the PUC to suspend direct-access energy contracts, the ability of large businesses to shop around for power deals instead of getting their electricity from the local utility. Angelides and others considered the suspension essential to selling bonds to finance the state’s entry into the power business as a result of the energy crisis. But Conlon said it was another nail in the coffin of deregulation, which he contends was never given a chance. It could be viewed in a negative light, he said of his continued support for deregulation.

“But as I have said, I don’t think the problem was the restructuring, I think it was the way it was implemented.”