As in the primary, for the November election we are endorsing Lanhee Chen for California controller. He would bring competence and independence to one of the most important offices in the state.
The state controller is California’s official accountant.
He or she compiles reports on the state finances and, while the state auditor conducts financial audits, the controller also can conduct performance audits.
A major problem with this office under current Controller Betty Yee, who is term-limited, is her tardiness in producing the state’s Annual Comprehensive Financial Report.
The last was submitted this past Feb. 2 for the fiscal year ending June 30, 2020 — more than two years ago. Every other state already has submitted its ACRF for the subsequent year.
This is crucial because California’s state and local finances depend on accurate assessments of the government’s fiscal condition. For example, that last ACFR reported an unrestricted net position of negative $208 billion.
Those are liabilities — largely for unfunded state pensions and retiree health care — for which every taxpayer in the state is liable.
Is the number any better for the 2020-21 fiscal year?
Should the state have used more of this year’s $97 billion surplus to pay down the liabilities?
We don’t know because the numbers weren’t produced for analysis by legislators, the governor or the people of California.
Part of the problem is the state departments under Gov. Gavin Newsom haven’t been reporting promptly. “It’s a matter of political will,” Chen told us in an interview. “If the ACFR isn’t on time, it implicates the state’s public finance rating.” Which means borrowing costs more, the extra cost picked up by taxpayers.
He pointed out if a family or business didn’t keep its own financial accounting up to date, it could be hit with heavy fines by the IRS.
“The broader issue is the FI$Cal debacle,” he said, meaning the state’s difficulties completing its new system, already costing $1 billion, to unify financial reporting in the state’s 152 departments.
“There’s no reason why the controller can’t be a performance auditor,” Chen said. “He or she should go to Medi-Cal or another department and look beyond the finances to how well are they performing.”
He also mentioned the Employment Development Department, which during the pandemic lost $30 billion to fraud, while frustrating worthy jobless Californians with months-long waits for help.
As to whether he would politicize such audits, Chen, a Republican, said he would just start with the biggest five departments, then proceed downward in size.
After Medi-Cal, those would be prisons and public education. He said he would be independent and especially resist union pressure against such audits.
In a state where a recent study by World Population Review found California suffered the lowest literacy rate of any state, auditing why that performance is so low would be a key to needed education reform.
Chen’s opponent, Democrat Malia Cohen, a member of the state Board of Equalization, is unlikely to make the needed changes Chen would make.
Chen would be the controller the Golden State has needed for decades. That’s why he’s drawn support from across the political spectrum. That’s why he deserves your vote this November.