Phil Angelides, 40, a Sacramento, Calif., developer; became one of the state's most visible Democrats in 1991 when he was elected chairman of the California Democratic Party, a position he held until April 1993.

That year he announced a bid for lieutenant governor; but changed his mind when state Controller Gray Davis, a fellow Democrat, said he too would try for the post. In January, Angelides announced his entry into the race for treasurer.

In a political upset, Angelides won the June primary by a 55%-to-45% margin over David Roberti, D-Van Nuys, president pro tern of the state Senate. Roberti was distracted by a recall election in his Los Angeles Senate district launched by opponents to the state ban on assault weapons, legislation that he sponsored. Roberti beat the recall, but not Angelides.

Q: In the June primary, four statewide bond issues totaling $5.9 billion were rejected by voters. Did you support them? Angelides: Yes, I did.

Q: How do you read the election results?

Angelides: The case wasn't made for why we need the bonds, and why we need to invest in the state's infrastructure.

The job of state leaders is to say, "Here are the investments we need to make, here's how much we think we need to commit, and here is the public fabric we want to weave." That has been absent from policymaking in California.

Q: Proposition 181 on the November ballot would authorize the issuance of $1 billion of bonds for rail transit. Proposition 182 authorizes a $185 million bond issue for first-time home buyers. Do you support these propositions?

Angelides: I support both of those. Because there is not unlimited capital nor unlimited tax dollars, we need to spend money on things that rebuild this economy

Q: Such as prison infrastructure?

Angelides: Well, it is the obligation of leaders to enunciate the costs of the crime bills going through. All things being equal, we need to spend our resources on rebuilding this economy, and find less expensive ways to house prisoners.

Q: Which will be a higher priority with you -- Public Works Board bonds for prisons, or bonds for higher education?

Angelides: You need to do things that rebuild this economy. We need to spend less on incarceration. We need to took at ways to use surplus facilities like military facilities to house the prison population. I would rather build state-of-the-art schools than state-of-the-art prisons.

As treasurer, one role I see for myself is to try to lay out a capital investment program for the state, very much in the way [former Gov.] Pat Brown did in another era. He clearly articulated goals for a water system, a university system, and a transportation system. We ought to decide what we want to do to grow this economy and society, then say how much money we have available to do that.

Q: What are your rules about accepting campaign contributions from Wall Street?

Angelides: It is largely moot with the municipal finance people.

Q: Underwriters aside, are you accepting contributions from other firms that do business with the state treasurer's office -- such as bond counsel, financial advisers, corporate trustees, and bond insurers?

Angelides: Yeah -- I have, and I will.

Q: Have you accepted contributions from Orrick, Herrington & Sutcliffe?

Angelides: Absolutely.

I've probably raised about $4 million total, and I would venture to say that on the order of well less than 5% has come from industry-related sources.

The bottom line is, I have not ruled out specifically accepting contributions from people who do business with the treasurers office. I don't make a hard and fast policy that I will not take money from this person, or from that person. If I do not feel good about it -- if I feel it puts me in jeopardy -- I won't do it.

As a businessperson for the last 10 years, I gave business to people who did good work, who were competitive, whose pricing was good, whose service was good. So, whether contributions are given to me or not, that's how I will conduct myself as treasurer.

Of the statewide candidates, I probably have the broadest base of fund-raising. Seventy percent of my contributors have given $250 or less.

Q: How much money do you think you need to win the election?

Angelides: We spent about $3.5 million on the primary, of which my wife and I loaned the campaign $500,000. My budget in the general election is approximately $2.5 million to $3 million, which is really driven by the need to be before the voters on TV for the final 15 days of the campaign.

Q: Any thoughts on spending so much money for an office that pays $90,000 a year?

Angelides: Clearly, I am not someone who is doing this for the salary. I've always said I'm someone who [pursues opportunities] where I can make the most difference.

Do I think our system is out of whack, and out of balance? Absolutely. I'm an advocate of campaign expenditure limits, and contribution limits matched with public financing.

The industry discussion on campaign contributions ignores a larger issue. Even after you get rid of industry-related contributions, those of us who are running for office are still in this sad system where you have to raise millions of dollars to buy air time so in 20 seconds and 75 words you can tell voters who you are.

So, what we need is a fundamental reform. And I will push for it very actively.

Q: How well has Kathleen Brown done in tier term as state treasurer?

Angelides: She's done very well. Kathleen came from a family of notoriety, and there were a lot of people waiting for her to come into office to shoot at her for technical competence. The mere fact that in her campaign for governor you hear very little about missteps of the treasurer's office is an indication that she has conducted the office in a businesslike way.

Q: columnists in some business publications criticized Brown for warning of a credit rating downgrade before the state's issuance of $7 billion of short-term obligations in July.

Angelides: Kathleen got some criticisms for statements she made during the sale. But let me say something. I think honesty ought to be respected in the marketplace. As the state's banker, I have an obligation -- early in the budget process -- to aggressively tell the state that we ought to get our fiscal house in order. We must match revenues to expenditures, and cut the waste out of government. As treasurer, I'll say [to the legislature], "Don't come to me at the tail end for budget deliberations] and expect me to borrow whatever it needs to plug the hole for which there are no revenues."

Q: Brown suggested a five-year deficit bond program to get rid of the state's fiscal-year carryover deficit. Do you believe this is a solution?

Angelides: .What she proposed is as reasonable as any alternative I have seen. To my knowledge, Kathleen is the only person who has put an accumulated deficit proposal on the table that has credibility. Absent bib lions of dollars falling out of the sky for immigration aid from a federal government that can't balance its own budget, this is a good mechanical way to deal with the deficit. A lot of people in Sacramento keep wishing and hoping that somehow there is going to be a remarkable economic recovery that will balance the budget.

Q: The state's debt ratio is a little above 5%, which translates into $2.2 billion of the general fund going toward debt service every year. Is this a prudent level?

Angelides: It is within the ballpark. We shouldn't be shooting up to 7% or 8%.

Q: Three rating agencies downgraded California in July. If you become treasurer, what can you do to get the state upgraded?

Angelides: I would like to think I would be pan of a new management team for this suffering corporation that decides it is going to balance its budget, do it on time, in a way to regain the respect of the financial markets. Let's be clear about it: in this final instance, the governor and the legislature adopted what people knew was a less than credible budget, and that is why the rating agencies downgraded us.

Q: Would you carry over Brown's targeted-business enterprise program if elected? The program is based on a state law that requires the state to set goals for the participation of firms owned by women, minorities, and disabled veterans.

Angelides: She is on the right track. I have had a chance over the last year and a half to meet some of the bond counsel and investment bankers, and I think there are a lot of very bright and talented folks out there that, frankly, match some of the larger, more established firms, at least in their creativity and energy. I always have had a bias toward the smaller entities, having built my own business.

What I will do is continue the program and look at what's worked and what hasn't worked, and frankly I'll ask Kathleen what she thought was best about it and worst about it alter the experience of the last four years.

Q: Will you take a high-visibility role on federal legislation -- such as IRS regulations -- on behalf of state and local governments?

Angelides: I will give my input. There is only so much you can do and be effective. My primary mission will be as the chief investment officer for [the Public Employees' Retirement System, the State Teachers' Retirement System], and the Pooled Money Investment Board, to get a good rate of return and try to invest more in California.

On the public finance side, my mission will be to try to set priorities and finance those projects that rebuild our economy. On the government finance side, it will be to be someone who pushes government to balance that budget and cut the waste out of government. If I have thoughts on the federal process that are helpful or that particularly help California, I will offer them.

Q: As a developer, what is your personal experience with dirt-backed bonds such as Mello-Roos and assessment bonds? Have you ever had problems with special tax delinquencies in community facilities districts associated with your development project?

Angelides: The answer is no, even though my opponent will allege the answer is yes, as he inaccurately has done so already.

Q: How many Mello-Roos districts have you participated in?

Angelides: We did large-scale development. We probably had five districts in which we were involved. And very successful projects. They are very healthy projects.

Q: You sound like you are interested in the Mello-Roos area.

Angelides: I am generally interested in making sure that local governments have the ability to finance what are needed infrastructure improvements -- but also making sure we don't overutilize devices in a way that creates down-the-line problems. As with any tool, you got to use it judiciously.

Q: Do you have in the back of your mind to run for governor someday?

Angelides: No.

Q: Why not?

Angelides: I have very much enjoyed the 10 years I've had in the private sector. I've invested. I've created jobs. I found it very rewarding. I decided to go to government to make a difference: to make the place efficient and to build a consensus for what are the right long-term investments. If I am good at it, at the end of four or eight years, and I am not burnt out, there may be other opportunities. But this is a very good job unto itself. At the end of four or eight years, it could be time to go back home.

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