Q&A: John Chiang, California State Controller
By Dan Verel, Business Journal Staff Reporter
CALIFORNIA — John Chiang was first elected as California’s State Controller in November 2006 and was reelected to a second term in 2010. He previously served on the state Board of Equalization, first elected in 1998, and served two terms, including three years as chair. Mr. Chiang began his career as a tax law specialist with the Internal Revenue Service and previously served as an attorney in the State Controller’s Office. Mr. Chiang graduated from the University of South Florida with a degree in finance. He received his law degree from the Georgetown University Law Center.
John Chiang
Q. What aspects of the economic recovery will have the biggest impact on state revenue?
Mr. Chiang: The largest source of state revenue is personal income taxes, which make up the majority of state revenues. However, our tax system is highly dependent on the highest wage earners, and that makes our revenues susceptible to market forces that our outside of our control. When we see risks like a looming European debt crisis affecting stock performance, it can have an impact on capital gains realizations that are ultimately tied to the budget.
Q: What is your overall assessment on the health of California’s budget, on state revenue versus spending? What is the single biggest issue, in your mind, facing the state’s finances?
Mr. Chiang: The largest issue facing the state’s finances is making sure we quickly act on any potential budget shortfalls that could affect the amount of cash we have on hand to pay all of the state’s financial obligations. Today, the State Controller’s Office is the most transparent financial operation in California, and one of the first things I did in 2007 was make monthly reports on the state’s cash balance available to the public. What we have seen over the last few months was a widening gap between predicted revenues, which together translated into a $5.2 billion reduction in cash resources. Thankfully, the Legislature, governor and treasurer worked with my office to come up with a plan to avoid another cash shortage.
Q: You recently warned lawmakers that they need to borrow $3.3 billion in order for the state to pay for priority programs. Gov. Brown recently signed a bill allowing the state to borrow $865 million. Does that address the issue?
Mr. Chiang: The $865 million in additional authorized internal borrowing is one part of the solution. The $3.3 billion total solution includes a combination of this internal borrowing, some external borrowing for a limited period which will be completed by the state treasurer, and some payment delays. Although it is not an ideal solution, it is a measured course of action that addresses our immediate needs without relying on IOUs. More solutions may be required if our revenues continue to erode or if our expenses significantly exceed budget estimates.
Q: Can the state expect this issue of running short on cash to continue through the year?
Mr. Chiang: This is a situation my office is closely watching, and I will continue to keep the Legislature informed of California’s cash condition. We need to be mindful also that July 12, 2007 was the last date the general fund had a positive cash balance, and since then the state has borrowed from internal funds and from investors to avoid the disruptions to government services that come with issuing IOUs. It is my hope that we can join together to fix California’s fiscal health, and then focus on restoring the investments in schools, roads, health care, and other programs that we value.
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JC is good and level headed. I will elect him if and when he runs for governor.
by AEGatchalian
I was wondering if some one owns a piece of property that is up for bulding if they just own
by monique