Wednesday, July 2, 2014

Does the controller have any control of UC?

Click on the image to see the contradictory news stories.
Under the "top-2" primary system, to get into the November general election, candidates must come in first or second in the primary.  In the primary race for state controller (incumbent controller John Chiang is termed out and is running for treasurer), a Republican - Fresno Mayor Ashley Swearingen - came in first.  Although top-2 is supposed to be non-partisan, it actually tends to reward party discipline.  What doesn't work well from a partisan perspective is lots of (real) candidates from your party in the primary since that splits the vote.  It is possible, for example, for a Democratic-leaning district to end up with two Republican as final candidates in the general election if the Dems split up their votes sufficiently.

In the case of state controller, however, there will be a Republican (Swearingen) and a Democrat on the ballot.  But as the image from my cellphone above shows, the race for 2nd place became a very narrow contest between two Democrats, Betty Yee (a member of the state Board of Equalization) and John Pérez (former assembly speaker).  When the counting finally ended on June 30, the Sacramento Bee's mobile version briefly had two articles with the same date and time listed: one in which Yee defeated Pérez and one in which Pérez defeated Yee.  [Click on the image to enlarge.]  It appears, however, that Yee is the winner by 400+ votes.  Pérez could ask for recounts but it is unclear whether he will or not. The conventional wisdom is that in a Democrat-leaning state, whichever candidate came in second - Yee or Pérez - would defeat Swearingen in November.  But that is not a given.  Swearingen has a good reputation as mayor and has a chance if she can raise sufficient campaign funding.  Being mayor of Fresno may seem somewhat obscure to you, unless you live there.  But being a member of the state Board of Equalization is not exactly a high profile position.

For UC, does any of this matter?  The controller keeps track of the cash flows of the state and writes most state paychecks (except for UC employees).  In good times, those roles don't much matter as far as UC is concerned. And unlike the governor and lieutenant governor, however, the controller does not sit on the UC regents.

But in bad times, juggling money between the various funds run by the state can matter.  It can be the difference between paying the state's bills and having to hand out IOUs instead (as happened in the last budget crisis).  In addition, although the state treasurer is generally in charge of floating long-term bonds and obtaining short-term loans for the state within a fiscal year, when the crisis becomes severe enough, the controller is in charge of floating short-term loans that cross between one fiscal year and another. 

In short, the identity of the controller might matter for UC in another budget crisis.  Whichever candidate wins in November could serve for the next four years, and possibly eight years (if re-elected).  The last downturn ended officially in 2009.  Past evidence would suggest that the possibility of a recession-free California economy extending to early 2023 is, shall we say, limited. As we have noted in earlier postings, current rhetoric that a rainy-day fund for the state (which will be on the November ballot) will be an important cushion in recessions is far overblown.*

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