2 Key Posts Were Second Choices for Many

The offices sound wonky, and they weren't the first choice for many of the candidates running for them in the June 6 primary election. But those who fill the state's two top financial posts can rattle Wall Street and shake financial markets around the world.

The state controller, California's chief financial officer, makes sure government bills are paid on time and has broad auditing authority that can be used to root out fraud and waste. The treasurer is the state's head banker, charged with overseeing tens of billions of dollars in borrowing every year.

A change in California's borrowing policies can cost -- or bring -- financial firms millions of dollars.

And investment policies pushed by either official from the boards of the state's two behemoth pension systems, on which both have seats, can influence markets across an ocean. When the board recently considered pulling its investments out of the Philippines, for example, it became a national issue in that country.

Both posts are being vacated by men vying for the Democratic Party nomination to challenge Gov. Arnold Schwarzenegger in the fall: Controller Steve Westly and Treasurer Phil Angelides.

State Sen. Joe Dunn (D-Garden Grove), running for the Democratic nomination in the controller race, says he is well aware of the weight the office carries -- even though he would rather be attorney general.

"There is no question that my No. 1 choice was to be attorney general," he said. "At some future day, I hope to become attorney general."

Dunn, a trial lawyer who led the Legislature's investigation of Enron during California's electricity crisis a few years ago, said he abandoned that contest when former Gov. Jerry Brown's entrance made his own attempt "a suicide mission."

Running for controller instead "would allow me to continue in public service," Dunn said.

His campaign platform calls for more state audits. He says his energy-crisis investigation proves he is not afraid to ruffle feathers by unleashing auditors on state agencies.

"I am the only person in this race who has a proven track record of putting together an investigative team to dig into public policy problems and bring about resolutions," Dunn said.

His Democratic opponent in the primary, State Board of Equalization Chairman John Chiang of Los Angeles, says he's the more qualified candidate because of his background in tax matters.

The board's five members, who include Chiang and the controller, oversee $40 billion in tax collections.

Chiang has been involved in the board's efforts to curb black-market cigarette sales and other business-tax evasion.

He worked as a staffer in the controller's office earlier in his career, when the post was held by Gray Davis, who later became lieutenant governor and governor.

But the controller's contest wasn't Chiang's first choice either; his plan was to run for treasurer. He backed out when California Atty. Gen. Bill Lockyer dropped his bid for governor and entered the treasurer's race.

Lockyer, who has name recognition and a huge campaign war chest, is unopposed for the Democratic nomination in that contest.

Both Republicans running for controller had set their sights elsewhere at some point in the race.

Former Assemblyman Tony Strickland of Moorpark almost bolted when it appeared that the congressional seat in his district was going to open, but he missed the deadline for switching races.

State Sen. Abel Maldonado of Santa Maria was eyeing the office of insurance commissioner, but when millionaire Silicon Valley inventor and entrepreneur Steve Poizner jumped into that race, Maldonado demurred.

Strickland has been campaigning at gas stations all over the state to rail against the sales tax on gasoline. He gives cash to drivers equal to the amount they would save if the tax were repealed, as he is urging.

"People are looking for leadership on what we can do to drop gas prices," said Strickland, who in his six years as a lawmaker resisted tax increases, fought deficit spending and proposed efforts to cut government waste.

He added that the controller's office is "the perfect job for me. You want a strong fiscal conservative."

Campaign records show that Strickland and his wife, Assemblywoman Audra Strickland, funneled campaign money into each other's consulting firms, in effect boosting their income through political donations. Political opponents accused them of laundering funds, but Ventura County prosecutors decided not to press charges.

Maldonado, meanwhile, touts his experience running his family's farm.

"I know what it is to make a payroll," he said, noting that the controller's job involves keeping the state's finances in order. "I know what it is to look at a bottom line."

Maldonado attempted to list his occupation on the ballot as "business auditor/controller" because of his role in the family business. But a Sacramento court forced him to acknowledge that he is currently a full-time legislator. Now his occupation is listed as "business controller/senator."

Maldonado is a moderate who describes himself as a bipartisan consensus builder. He worked with Gov. Arnold Schwarzenegger and Democrats to change the state's workers' compensation system, a move credited with reducing the cost of doing business in California.

"The system needed to be fixed, and we fixed it in a bipartisan fashion," Maldonado said. "The same backbone I used in that I will use to audit state government."

Three other Republicans -- Jim Stieringer, the city treasurer of La Mesa, and businessmen Bret R. Davis of Foster City and David L. Harris of Discovery Bay -- also filed papers to run for controller but have not raised enough money to mount what most analysts consider viable campaigns.

In the race for treasurer, two Republican officeholders are competing to be the nominee. One of them, Assemblyman Keith Richman of Northridge, says he has always wanted to be treasurer.

Richman is a budget buff who in 2003 helped form a bipartisan group in the Legislature that looked for ways to bring fiscal stability to the state. The effort fizzled but was the inspiration for a budget proposal released by Richman and Assemblyman Joe Canciamilla (D-Pittsburg) that included cuts in public services and modest tax increases. Richman was the only Republican who broke ranks with his caucus to support raising taxes that year.

He has also crusaded against what he calls excessive pension benefits granted to government workers that are costing taxpayers billions.

"I am going to continue to push for public employee pension reform and stress the importance of creating a pension system that doesn't pass on billions of dollars of debt to our children and grandchildren," Richman said. "Money going to pensions is money not going to education or to investing in roads and infrastructure."

Richman's opponent is anti-tax activist Claude Parrish of Rancho Palos Verdes, who sits on the Board of Equalization.

The Times reported this month that Parrish helped boost the primary chances of a friend and potential successor to his office by hiring her as his deputy -- for three months -- until the state approved the ballot descriptions of candidates and she resigned the post. She was then able to identify herself as his deputy on the June ballot, and analysts say the designation will probably win her votes.

Parrish did not respond to requests to discuss his platform in the treasurer's race. The Howard Jarvis Taxpayers Assn. is endorsing Parrish, whose top priorities, according to campaign material, are to eliminate all but the most essential bond issues and streamline the borrowing process to do away with fees charged by the investment bankers, consultants and attorneys he describes as Wall Street "middlemen."