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Tax Pro, Former Legislator Vie for State Controller Post

Democrat John Chiang's and Republican Tony Strickland's views on the oil tax ballot initiative highlight their divergent philosophies.

September 23, 2006|Steve Chawkins | Times Staff Writer

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.

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