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Tuesday, Jun 6, 2023

Chiang to Speak at Economic Summit

It’s one of those elected positions that draws a blank if one is asked to describe what it is about. But State Controller John Chiang knows just what the office is about making sure that state money is spent wisely. Chiang is the chief financial officer for the state, administering $300 billion in state pension funds and serving on 76 state boards and commissions. His election to the controller’s office followed eight years on the Board of Equalization, representing 73 cities including Los Angeles. He has represented the Board of Equalization on the Franchise Tax Board and served as the chair of the Streamlined Sales Tax Project’s Board of Governors. Chiang will be a keynote speaker at the San Fernando Valley Economic Forecast taking place May 17 in Universal City. Q: What are you going to be discussing at the Economic Summit? A: I am going to be talking about California and the global economy. I always like to take that perspective – looking at the impacts of the United States on other countries and of those countries on the United States and where our next investment opportunities are. We buy a lot of cheap products from around the world but what products and services do we have to offer? China has a [gross domestic product] in the double digits but they lack a lot of mid-management and upper management expertise. How do we monetize that to reduce trade balances; how do we do that to create financial and business opportunities in California? Q: What is the fiscal health of the state right now? A: We carried a $9 billion surplus into this fiscal year and we basically wiped that out. For me that is a matter of great concern. Q: Why is that? A: When you carry a surplus you want to be able to pay debts, pay for outstanding obligations. We still have some very large obligations in terms of state mandates. Schools, local jurisdictions and special districts are paying out money according to state mandates and we frankly ought to be repaying them back timely. I don’t like the fact that we push a lot of our obligations over. That is fiscally irresponsible. Q: In the short time you have been in office what priorities have you found need to be addressed? A: One I just mentioned the mandate issue. Some of these mandates are created when a kid goes to kindergarten and we start to pay these mandates back by the time they go to college. It’s a terrible fiscal practice. I wanted to make sure the local jurisdiction and school districts have the best financial information as I did at the Board of Equalization so I am doing a lot of educational seminars. We are going to provide information about financial reporting and auditing requirements. I want to enhance the communications between the Controller’s office and the entities we are auditing. We don’t have a disaster recovery plan in the Controller’s office. That is not acceptable. In the event of calamity we have to have the capacity to continue the financial operations of this state. I want to save a few pennies here and there to fund a study to do that. Q: Is being Controller what you expected and is the office run the way you want it to? A: We have some extraordinary people here. That leads to another area of concern not only here in the Controller’s office but in state government. The leading edge of the Baby Boom generation is starting to retire. We are losing tremendous institutional knowledge. Those individuals have provided benefits not only to me as controller but to the taxpayers of California over two or three decades. Q: Is there a concern you won’t be able to find anyone to replace those people? A: Yes. These people have extraordinary abilities and experience. With the state wage structure we lost a lot of middle management. We have to have those people who have 15 years to 20 years working the computer system, who understand institutionally how government works, who have built up the relationships and trust. When you have people move in and out of the system there is no continuity. Q: Is the California taxpayers’ money being spent wisely? A: For the most part. I’d like to see us maximize the dollar. I wouldn’t argue there is a lot of waste. This governor [Arnold Schwarzenegger] came in saying he was going to eliminate waste and then I think he saw great difficulties. I’ll give you an example of how thin we are. Legally, I can audit expenditures involving state money. I have about 210 auditors. I have only 8 un-earmarked auditors. The other 202 audit education and special districts. If I see waste somewhere in a project I have to decide how I am going to audit that project with only 8 un-earmarked auditors. The budget cuts severely hamper our ability to go in and stop waste that is occurring in various programs throughout California. Q: How did the experience on the Board of Equalization help you in being Controller? A: I used it as an experience to learn about fiscal policy and tax matters and then put that in the context of the economy of California. I get to work on a broader platform in this office. Q: Were there programs started on the Board of Equalization that you have continued as Controller? A: Free income tax assistance. The great thing about that is we took it statewide. With our property tax assistance we did our first one down in San Diego, so that was outside the district I represented on the Board of Equalization. All of the financial literacy programs I started early in my first term on the Board, we are now bringing over to the Controller’s office to share with all Californians. Q: Why is it important for people to have financial literacy? A: Morally, legally and fiscally it changes their personal lives. First of all, I think it makes them feel good. Frankly, as they develop their own financial situation and can make financial contributions, they become participants in California’s economy and hopefully the community. Q: Should the state Controller’s office be more high profile, similar to what Laura Chick has done in Los Angeles? A: The Controller’s office in Los Angeles and the Controller’s office for the state are vastly different. We do some of the same stuff. Laura can conduct performance audits and legally we cannot. That’s how Laura can generate a lot of focus; she can criticize management practices. We look at the numbers. And frankly, Laura has more un-earmarked auditors than I have. Q: Should state residents know more about what the office does? A: We try to get out there. I think we’ve taken on a broader platform. No one talked about financial literacy in this office or created as many programs. We’re going to educate 1,000 financial personnel in seminars. I used to do 800 events a year when on the board of equalization. I think that is going to drop as controller. Q: How do you see yourself taking part in the legislative process? A: We’re going to offer quality information. There has been a severe disconnect as to what happening in the private sector, especially in terms of economic vitality. So what we started is a new monthly cash report as to revenues coming into the state coffers. I put together a 7-member economic team that will comment on segments of California’s economy. For instance, the first one will be on real estate. They’ll talk about the turning in the residential market, the positive developments we are seeing on the commercial side and how that varies from trends over the past couple of decades. That type of commentary gives the legislators a sense of what is happening in the economy. I am meeting with quite a few elected officials to keep them briefed. I want this Controller’s office to be very engaged, providing critical financial information to the legislature and the governor’s office. SNAPSHOT – John Chiang Title: State Controller Age: 44 Education: University of South Florida with a degree in Finance; Georgetown University Law Center. Personal: wife, Terry Chi

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