Tax Pro, Former Legislator Vie for State Controller Post

The race for state controller -- California’s powerful chief financial officer -- pits a former legislator against a tax expert, two candidates who agree only that California’s $131-billion budget should be free of waste and fraud.

A lawyer with a degree in finance, John Chiang, 44, is running on his 10 years of experience as a member of the Board of Equalization, a state panel that administers a variety of tax programs. A Democratic Party activist, he is the board’s chairman.

Tony Strickland, 36, is asking voters to consider his six years in the Assembly, where he was known as a fiscal conservative. He opposed tax increases and was among those who sued Gov. Gray Davis to force the release of energy contracts.

A Republican who proudly remembers pounding campaign signs into the ground as a 12-year-old in Simi Valley, Strickland casts Chiang as an unquestioning supporter of higher taxes. He points to Chiang’s advocacy of Proposition 87 on the November ballot, which would tax oil produced in California for research into alternative energy sources.

“That’s a billion-dollar tax increase,” Strickland said. “When you raise taxes, you’re naive if you don’t think it’s going to be passed on to the consumer.”

Chiang countered that he takes a longer view on the issue. “We need to drive investment into alternative and clean energy sources,” he said. “The middle class is strained because we’re so dependent on fossil fuels.”

Supporters of the initiative point out a provision barring companies from passing their extra costs along to consumers. Opponents say motorists would pay more anyway because Proposition 87 would discourage California oil producers, causing companies to import even more from the Middle East.

Although it’s the Legislature that levies taxes, the controller’s influence on California’s finances is significant. He or she controls all the state’s cash, overseeing the budget and launching audits to uncover abuse of funds.

The controller also casts one of five votes on the Board of Equalization, which, among other functions, hears appeals of state tax decisions. In addition, he or she helps supervise the investment of more than $350 billion in state pension funds and sits on the boards of 62 agencies, including the State Lands Commission, which makes crucial decisions about oil drilling and other activities on millions of acres on- and offshore.

Although the job isn’t one of the glamour posts of state government, it can serve as a springboard to higher office. Since the end of World War II, two of the state’s eight controllers have become U.S. senators and one -- Davis -- was elected governor after serving as lieutenant governor.

In Democrat-dominated California, no Republican has been elected controller since 1970. The key for Strickland and other Republicans vying for statewide office is the race between Gov. Arnold Schwarzenegger and state Treasurer Phil Angelides, said Allan Hoffenblum, a Republican political consultant.

“They’re hoping that Arnold wins by a large enough margin to carry them through,” he said.

In the controller’s race, an Aug. 1 Field poll reflected support splitting along party lines, with Chiang leading 38% to 27%. However, the poll noted that more than 80% of those surveyed had no opinion because they knew so little about either candidate.

The son of Taiwanese immigrants, Chiang grew up in the suburbs of Chicago. He was an attorney for the Internal Revenue Service and for the controller’s office under Davis before being elected to the Board of Equalization in 1998.

Chiang said that as controller he would audit the Department of Health Services, scrutinizing the Medi-Cal program and the money it lays out for prescription drugs. He said he also would push for state investment in companies developing alternative energy sources.

“I’m looking at what we’re invested in,” he said. “If you’re investing in clean, renewable energy, who’s first to market with it will have a significant place in the world.”

On the Board of Equalization, he credits himself with initiating state programs to provide tax advice to small businesses, financial seminars for women and free tax help for the elderly and disabled.

In 2005, he was among the board members criticized by taxpayer groups for “coddling California’s corporate welfare queens.” The board had voted to give more than $80 million in refunds to companies that invested in manufacturing equipment but had paid no income taxes in recent years.

Chiang and state Controller Steve Westly said they were following the Legislature’s intent.

To Chiang, the essence of his current job involves number-crunching and interpreting tax rules -- tasks he believes are also essential for the controller.

“I trust that Tony Strickland is a nice guy, but if you want someone to audit the books, you need someone with a financial background,” Chiang said. “If you’re talking about utility taxation and capitalization rates, I’ve been doing that for 10 years, and it’s going to take him a long time to learn.”

Strickland said he knows how to delegate.

“I think Jimmy Carter was one of the smartest presidents, but he tried to do everything himself,” he said. “You need someone with a clear vision who will surround himself with the best and the brightest.”

A basketball star at Whittier College, Strickland became the Assembly’s youngest member at age 28. After term limits forced him out two years ago, he became president of the California Club for Growth, an anti-tax organization founded by Arthur Laffer, the theoretician behind supply-side economics.

Strickland is on leave from the group, which promotes fiscally conservative Republicans, to run for office, an aide said.

Strickland’s wife, Audra, was elected to the Assembly in 2004.

In an unusual exchange, she and her husband each directed some of their campaign funds into consulting businesses owned by the other. They have said they did nothing wrong, and Ventura County prosecutors said an investigation found no criminal activity.

As a legislator, Strickland opposed tax increases even in the face of a dramatic state budget deficit. His most publicized action was suing Davis in an effort to unlock details of state contracts with energy companies. His suit helped stem the state’s energy crisis, Strickland said, and aided the movement to recall Davis.

“We forced them to renegotiate,” he said, “and we saved ratepayers billions of dollars.”

Other Republican lawmakers and some news outlets also sued Davis, who released the information before a court could decide the matter.

Strickland said that as controller, he would be more willing than Chiang to rock the boat, pointing out that he pursued his suit against the advice of many Republican colleagues.

He said his top target for an audit would be the Los Angeles Unified School District.

steve.chawkins@latimes.com

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(BEGIN TEXT OF INFOBOX)

John Chiang

Party: Democrat

Occupation: Chairman, state Board of Equalization

Age: 44, born in New York City

Residence: Torrance

Personal: Married

Education: Bachelor’s degree, finance, University of South Florida; law degree, Georgetown University Law Center

Career highlights: Appointed to Board of Equalization in 1996, first elected in 1998. Former aide to Sen. Barbara Boxer and then-Controller Gray Davis.

Platform: Channel some state investments to companies developing clean energy sources; review state pension funds to diversify investments; use audits to scrutinize Department of Health Services, particularly Medi-Cal.

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Tony Strickland

Party: Republican

Occupation: President, California Club for Growth

Age: 37, born at Ft. Ord, Calif.

Residence: Moorpark

Personal: Married to Assemblywoman Audra Strickland; one child.

Education: Bachelor’s degree, political science, Whittier College

Career highlights: State Assembly, 1998-2004; chief aide for Assemblyman Tom McClintock (R-Thousand Oaks), 1996-1998

Platform: Audit use of state funds by “bloated bureaucracies” such as the Los Angeles Unified School District; oppose unnecessary new taxes.

Los Angeles Times