LOS ANGELES -- California Treasurer-elect Matt Fong said last week that former Goldman, Sachs & Co. executive Bill Donovan is assisting him with transition planning, and added that nine appointees of outgoing Treasurer Kathleen Brown will probably be replaced.
"As to who is going to be my senior staff, or who are my senior advisers, I haven't figured that one out yet," Fong, a Republican, said in an interview Thursday, two days after he defeated Democratic challenger Phil Angelides, 48% to 43%.
Fong, Who said he spent about $3 million on the race, takes office Jan. 4. He received 3,608,505 votes, Angelides received 3,171,317 votes, and minor party candidates received a total of 677,570 votes, or 9%.
Brown, who lost a bid to defeat incumbent Republican Gov. Pete Wilson, has not said what she will do after her single four-year term expires.
Fong said his choice of Donovan -- a prominent California investment banker -- to assist in the transition should not be viewed as a harbinger of future appointments.
"Of course, I look to Bill for financial expertise," Fong said. "He comes with a great resume. I do seek his counsel. But to read any more into that is very premature. I haven't even established who my deputy treasurer -- or whatever the title is -- is going to be."
A Goldman vice president, Donovan was manager of the firm's Western region public finance operations from January 1991 until he and two other San Francisco-based vice presidents -- Adrien Mally and Vincent F. Forte -- were terminated Oct. 13. They were among a number of Goldman executives across the country who lost their jobs in a company cost-cutting move.
Reached for comment, Donovan said that he was not coveting a permanent role in the Fong Administration and would return to the private sector next year. Before joining Goldman, Donovan was a bond lawyer at Orrick, Herrington & Sutcliffe from 1969 to 1990.
"To avoid a conflict of interest or the appearance of a conflict of interest, I will not consider employment with any firm" until after Fong's inauguration in January, Donovan said.
Donovan said Fong held his first transition team meeting last Wednesday at Los Angeles' Doubletree Hotel, which served as headquarters for state Republican candidates as they monitored election-day vote tallies.
Both Donovan and Fong declined to say who is participating on the transition team. Concerning Donovan's role, Fong indicated that Donovan would help him bring in a "fresh team" to the treasurer's office.
While hoping to start with a "clean slate," Fong said "there may be somebody that is in there that may deserve reappointment. I won't say as a matter of course that everybody gets fired," Fong said. "But, this is a partisan office, and I intend to bring in those who share my political philosophy as well as my management style."
The treasurer is empowered to appoint a chief deputy treasurer and two assistant treasurers. The treasurer also appoints the heads of the California Debt Advisory Commission, the California Debt Limit Allocation Committee, the California Industrial Development Financing Advisory Commission, the California Health Facilities Financing Authority, the California Pollution Control Financing Authority, and the California Educational Facilities Authority.
Annual pay for the nine positions ranges from $80,000 to $90,000 each. The 40-year-old Fong, who currently earns $95,000 a year as vice chairman of the state Board of Equalization, is eligible to receive $90,000 a year as treasurer.
Fong said he will be "dropping by" the treasurer's office sometime this week. A Brown staff member said Fong will be briefed on staff organization, key legislative issues, and bond deals in the works.
The incoming treasurer said he spoke with Brown last Wednesday and she "was very gracious when we talked. She offered the full support of herself and her staff to make the transition smooth for people, which I certainly appreciate."
Fong said he felt uncomfortable discussing specific plans for the ofrice, saying he was choosing his words carefully because "people are nervous and jittery any time there is change ."
Observers are waiting to see if Fong exercises his prerogative to throw out the now-existing underwriter pools that are tapped for negotiated deals. Fong also can renegotiate the state's bond counsel contract, which recently was renewed with Orrick. Herrington & Sutcliffe.
Fong said he would not "have any comment about those policies until I've had an opportunity to study those issues."
He also said he will he an "activist, hands-on state treasurer who is interested not only in the broad policy of the office, but also in the nuts and bolts of how things operate. I will be very interested in embracing new ideas that others may have raised in the past but didn't receive an audience."
During his campaign, Fong floated a novel method to reduce a portion of the state's $3.7 billion carryover deficit. He said the state could issue $500 million to $800 million of deficit-reduction revenue bonds backed by state-owned oil reserves.
Last week, Fong said issuing bonds to reduce the deficit remains "a solid idea that is on the table," but he declined to characterize it as an ironclad commitment.
"Once I am in the office, I will have the resources to test it," he said. "It has to withstand the test of prudence. From where I sat outside as a candidate with my limited resources, it seemed like a very good idea."
Fong said the fact that both the governor and treasurer will be Republicans could eliminate the clash that some observers saw between Brown and Wilson's department of finance during meetings with Wall Street investors.
"It is important to go back [to New York City] and have the same page in front of your audience -- and to both believe in the same page," Fong said. "Coming from the same party there is a strong assumption we will be focused together as a team, presenting the best face and the best foot forward for California."
Fong said he "absolutely" supported Wilson's decision to balance the state budget with the expectation of receiving federal dollars for illegal immigration-related costs.
