For California Jobs: It's Capital, Stupid!
By Matt Fong

Bill Clinton's theme has been, "It's the economy, stupid!" We
know. California continues to trail the rest of the nation in job
creation. My prescription for our state's recovery can be summed up
simply as, "It's capital, stupid!"

As a candidate for State Treasurer, I owe it to the voters of
California to provide insight as to what I hope to accomplish as your
next State Treasurer. That's why earlier this year I authored a
five-point Taxpayer Protection Plan that outlines how California can save
$2 billion a year. More recently, I unveiled three position papers, that
describe how California can create jobs, rebuild the infrastructure and
help restore the state's credit.

More Capital to Small Business Equals More Jobs

I believe that small and medium size businesses in California are
having a problem accessing capital from financial institutions in their
communities. The State Treasurer through the state's Pooled Money
Investment Account (PMIA), invests over $27 billion in a variety of
securities and bank deposits around the state. Unfortunately, most of
this money is not reinvested in local communities. Instead, much is
invested in federal government securities like T-bills which provide a
safe return, but only helps to finance the federal deficit. I believe
that by investing these funds back into local communities, more capital
would be available to local businesses looking to start-up or expand.
This will help accelerate the creation of more jobs. Reinvesting $1
billion of the $27 billion fund into high-quality local financial
institutions, would free up an additional $650 million in capital that
could then be made available to credit worthy businesses and individuals
in the community. According to the banking industry, this would result
in 20,000 new California jobs!

Financing Infrastructure Projects Without Raising Taxes

One of the primary responsibilities of the State Treasurer is to
issue bonds to build schools, prisons and other infrastructure projects.
I believe the state has a way to finance an additional $500 to $800
million in infrastructure projects, without raising taxes.

Here's my plan. A tax-exempt revenue bond would be issued by the
treasurer for $500 to $800 million with a term of five to 10 years. The
bond proceeds would be invested in various infrastructure projects. With
these proceeds, we can finance new classrooms for elementary school
children, build new research labs and libraries for our colleges and
universities, construct more prisons, and build and repair roads and bridges.

The state has an existing revenue source that could pay the
interest and retire the principal amount of the bonds. No new taxes or
fees would be necessary. The revenue source I've identified is the money
the state receives each year from the sale of state-owned oil. I'm not
advocating new production. Oil is produced already in state waters and
the revenue generated currently goes into the state's General Fund.

This type of plan has become an accepted practice by oil
companies around the world. With its ownership of oil reserves, the
state essentially is an oil company with no debt. In short, we leverage
an existing revenue stream and use the money to invest in the state's
crumbling infrastructure.

California's debt per capita has almost tripled in the last four
years. This plan would allow us to finance new projects to create jobs,
without new taxes.

Investing in California's Fiscal Future

Another responsibility of the State Treasurer is to invest
California's public pension funds (CalPERS & STRS). Did you know that
these two large pension funds only invest 10 percent of their combined
$130 billion portfolio in California? Further, only a small percentage
of the fees paid for investment advice and services is paid to California

I propose that we increase CalPERS and STRS portfolio holdings of
California investments. By expanding by three percent the investments
these funds already make into California's residential real estate
construction and into small and medium size businesses, we will create more
than 250,000 new jobs.

In addition, I propose to the greatest extent possible, that both
CalPERS and STRS utilize the services of California investment firms. It
only makes sense to use investment advisors who know California
investments and who have a stake in California's future.

There's nothing wrong with California that can't be fixed by
what's right in California. Raising taxes on an already burdened family
is not the right answer. Our focus should be identifying ways to cut the
waste and inefficiency out of government, while providing an improved
level of services. In other words, government needs more creative
thinkers to make decisions based on smart business practices, and not
based on decisions of political opportunism.

Basil Walsh said, "If you don't know where you're going, how can
you get there?" In brief, you've heard my plan for creating jobs and
investing in California's future. If you would like to receive my
Taxpayer Protection Plan or one of my position papers, please call
toll-free 1-800-MATT-FONG and ask for a copy.


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The material included in this voter guide is archived and will not be updated. Please visit the California Voter Foundation's homepage for the most current information and resources.

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