Endorsement: John Chiang for state treasurer

The California state treasurer is charged with investing the state’s money and selling its bonds. That’s not quite as sweeping as it sounds. The Legislature and voters actually decide what projects to sell bonds for, and there are numerous constraints on the multibillion-dollar Pooled Money Investment Account that the treasurer manages. That said, it is the treasurer’s job to sell the state’s creditworthiness, such as it is, to Wall Street investors and money managers, to help oversee investments made by California’s two colossal public pension funds, and to hector the Legislature occasionally about spending too much.

The next treasurer will have big boots to fill. Bill Lockyer, the current but termed-out officeholder, has been a tough-minded financial manager who stewarded the state’s assets through the recession. The candidate running to replace him who has the best shot at shepherding the state’s money as well is Democrat John Chiang, who currently serves as state controller. (Yes, that’s a different job.)

Chiang’s opponents are Ellen Brown, a Green Party candidate, and Greg Conlon, a Republican. Brown, an attorney and author of several books, two of which examine the American financial system, has proposed establishing a state bank. In fact, this is her No. 1 issue. The idea is interesting — the state would invest some of its own assets in its own bank and make loans to people, including those who haven’t been able to obtain credit elsewhere. Only one state has a state bank — North Dakota — and it is immensely successful. But other factors are at work in North Dakota, including the fact that it is in the midst of an oil boom. Brown is thoughtful on the subject, but it’s far too risky a venture for California at the moment.

Conlon has been a businessman and a CPA, is a former president of the California Public Utilities Commission, and is currently chairman of the Finance Committee in the town of Atherton. He wants to focus on California’s credit rating and the unfunded obligations of the state’s two major pension funds.

But Conlon doesn’t begin to have Chiang’s experience. As state controller for eight years, Chiang has managed the state’s cash flow and paid its bills. He retains his high school mathlete enthusiasm for numbers. Chiang already knows the Wall Street players and credit rating agencies that he will have to interact with. As controller, he already sits on the boards of CalPERS and CalSTRS; as treasurer, he will also sit on those boards. As controller, he cracked down on pension spiking and did a sweeping audit of the struggling city of Montebello. He also created an easily accessible online database of the salaries and benefits of public employees and elected officials.

In June 2011, he withheld legislators’ paychecks because he said they hadn’t passed a balanced budget on time. A court ultimately ruled that he overstepped.

But on balance, he has acquitted himself well as controller. He will make a strong treasurer as the state works on reducing its debt, raising its credit rating and plotting a secure future for its public pension funds.