Assemblymember Frommer Championed Parks, Education; Turns to Controller's Race

Assemblymember Frommer, you've announced your candidacy for statewide office, but before we turn to that, let's talk about your record in the Legislature. Elaborate on one of your priorities - your involvement with the state's urban parks agenda for California.

As I think your readers know, despite California's image as a state of environmentalists, many of our large urban centers have less parks and open space than many other major American cities. Los Angeles, for example, has less open space and parks than New York, Boston, Minneapolis, or Chicago. So four years ago we created a program whereby California would help local government and nonprofits build neighborhood parks. I'm very proud that this program, which over the past four years has sent $128 million to communities across the state, not only in cities like San Francisco and L.A., but also to the Central Valley and Fresno County, for example, where a number of communities have grown enormously in the last 20 years and have little money for new parks. We're going to try to continue this program, and we fund it through bond money. And as we're planning a new parks and open space bond measure, which will hopefully go to the voters in 2006, we will be specifically requesting additional funds for this program. I think this is really getting widespread support because this problem isn't afflicting just Los Angeles; it's afflicting cities all over the state, and we're getting a very diverse coalition in the Legislature around this issue.

TPR's sister publication, the Metro Investment Report, in an interview last month with the leadership of the Trust for Public Land covered some of the discussions about a new state parks bond. Can you talk about the status of those negotiations and discussions?

There's a number of components to this bond, and it not only deals with money for acquiring watershed, open space and natural and scenic properties, but also part of this bond will be dedicated, as Prop 40 was, to putting more money into urban areas for parks and open space. The negotiations are moving forward. If we're going to get this on the ballot in June or November of 2006, we're going to have to come to closure in January or February of 2006. So when we get back to Sacramento when the Legislature goes back into session, I believe there will probably be a flurry of activity towards getting the final deal done.

Let's turn to the issue of the affordability of higher education and what the state might do to realize some of the ambitions that former Governor Gray Davis and others in the state expressed at the beginning of the 21st century. What's your involvement, and what are the options?

In California that we've had, since about 1960, a so-called master plan for education that was envisioned under former Governor Pat Brown. And under this plan, if you worked hard and made the grades, California would find a place for you at a UC or Cal State campus where you could get a great higher education at a very reasonable price. Unfortunately, that compact in the master plan has been stretched thin. Tuition costs have gone up enormously, on some campuses 40 percent. We have a tidal wave of students coming forward who want to go to college, and we don't have the space on campuses. And in an era of tight budgets higher education has seen numerous cuts. The result is that a lot of young people are not able to get a college education at a reasonable price.

Treasurer Phil Angelides came to me with a plan that I thought was brilliant. The idea is to create a trust fund whereby we would put properties that the state owns – and the state is a huge landowner in California – and take under-utilized properties and put them in a trust fund. We would have an experienced panel of experts be responsible for managing those properties. They could rent them, lease them, go into joint ventures – much like we do with the California public retirement system, where the CalPERS board is managing a portfolio of real estate – but the bottom line is that they're there to generate a return. On its real estate portfolio, CalPERS has been generating about 11 percent return, which is pretty good.

If we assumed a 6 percent return on $5 billion worth of property in the trust we would generate $300 million per year. We would take this money and put it into an endowment for higher education. This endowment would be separate and governed by a separate board, and its mission would be to fund programs that have had success in getting kids into college. Whether that's scholarship and financial aid, whether it's outreach programs in our schools like the AVID program where we're starting to talk to kids in the seventh and eighth grade about what classes they need to take in middle school and high school, talking to the parents as well. We can fund things like high school counselors. Many of our high schools do not have adequate counselors for students to talk about their academic needs. The money could be used only for higher education; once it goes into the trust it can never be borrowed from or used for any other purpose. This is an extremely innovative way for us to do more for higher education without raising anybody's taxes and without taking away from other programs that are equally important. It's modeled after a program that the government in British Columbia has been doing. Unfortunately, the governor vetoed this bill, AB 593, which I carried, but I will be re-introducing that legislation next year in the hope that we can push forward for this innovative plan.

That is on the programing-expenditure side of your legislative responsibilities. On the revenue side, address some of the fiscal work you've been engaged in especially around the crackdown on tax shelters.

One of the big issues that nobody has addressed until recently is that in California $6 billion a year in taxes go unpaid while we are asking people to endure cuts in schools and health care programs. Some in my party are proposing higher taxes when many of California's most powerful and wealthy residents aren't paying taxes they owe, and I think that's wrong. One of the things that we learned was that many of our wealthy residents and large corporations were taking advantage of illegal tax shelters. These are tax shelters that have been declared illegal by the IRS and the state Franchise Tax Board, yet there was no serious penalty for engaging in this behavior. The typical investment is about $7 million, and the typical penalty amounted to a slap on the wrist. They were less than 20 cents on the dollar, and $1,000 for the promoter, regardless of the size of the tax shelter.

Senator Gil Cedillo and I wrote two companion bills in tandem that made California the toughest state in the country in terms of cracking down on tax shelters. We raised the penalties, and we increased the time for which the state could bring action, both civil and criminal, against the taxpayers. We said if the taxpayers came forward, paid what they owed by April 15, 2004, they would not be prosecuted. The Franchise Tax Board estimated that this amnesty program would bring in about $90 million. In fact, it brought in almost $1.4 billion, which helped us balance the budget and avoid deep cuts to programs about two years ago.

This type of program and its success illustrates the fact that in California tax evasion has become a major industry, and we're going to need to be very innovative and diligent in order to collect that money. Again, before we start talking about big program cuts or making anybody pay more taxes, let's start collecting the taxes that are owed and get them in the bank first.

Could you comment on the unfortunate war between the Legislature and the governor and whether there will be any positive outcomes for the public?

"Unfortunate" is the key word here. There was a real effort by the Legislature to work with the governor on some of the issues that he has pushed forward in the special election, particularly redistricting and the issue of government finance. But the governor at the last minute decided that he wanted to move forward and go to the ballot, spend $80 million in taxpayer money on a special election that, in my opinion, will not improve our schools or help our fiscal situation. It will only, I believe, create more acrimony between the different parties and interest groups in California. What I hope is that when the dust settles on this election – and I think the governor is probably not going to fare very well – people can realize that we're much better off trying to work together to solve problems within the legislative process and collaborating rather than trying to use a sledgehammer approach of the initiative process to get things done. And I'm hopeful that perhaps next year, with the governor facing re-election, that he will come back to the Legislature and work as he has done in the past, as he did when he first came into office on some critical issues such as workers compensation and fiscal reform, in a way that will get the parties talking and acting together.

It's probably unfair to ask this of a leading legislative Democrat, but does any fault lie at the doorsteps of the Legislature?

I think so. I don't think anyone is without blame. I think the governor came at it with an agenda that was calculated very much to put the Legislature at a distance. He didn't want to compromise on anything, and it's not that we were opposed to talking about his ideas, but it was sort of like there was no jumping-off point for him. There was no compromise. And a number of people tried to come in. Former Speaker Bob Hertzberg did yeoman's work going back and forth between the governor and the legislative leadership, and it was frustrating because at the end of the day the governor couldn't quite put together a deal.

I will say this about Democrats: Democrats need to be focused on how we can make government work better, how we can look on efficiencies, how we can get more for our tax dollars. We care deeply about the services that government provides, and that means we have to work hard at making sure that taxpayers are getting their money's worth and that we're doing everything in the most efficient way possible. And certainly we can focus more on that area.

Let's turn to your next opportunities in public service. Share with our readers what your plans are for public office.

I've thrown my hat in the ring for state controller in 2006. And a lot of people will ask, "why are you running for controller?" And then they will follow up with, "well, what does the controller do?" The controller's office is a very important statewide office. It's the state's chief fiscal officer, and it deals with a wide variety of issues, from health care to tax policy. The controller sits on the two major pension funds, CalPERS and CalSTRS and on a myriad of boards and commissions that deal with everything from hospital financing to waste recycling. It's a very interesting job.

I think it's an office that's been under-utilized in some ways, particularly in terms of looking at how to make government work better. The controller has the power of the performance audit to look at every program and every agency to see how they're doing in their jobs to make sure that they're succeeding in their missions and spending money wisely. That power needs to be used constantly. The office needs to be used as a bully pulpit to improve the way government operates. We also need a controller who will look at those two pension funds, CalPERS and CalSTRS, which manage about $280 billion dollars.

That money can be invested more in California, and I think a way that will bring a tremendous return – which is obviously the controller's first responsibility, to get a good return for the beneficiary – but I think there can be more of a synergy between the California economy and investments. Already CalPERS in particular is investing a tremendous amount of money in things like providing affordable homes for ownership, environmental technology, and also in terms of infrastructure and technology in the wi-fi and other high-tech arenas.

We ought to be looking at that as a potential partner where the state can actually make a great return for the beneficiaries and help our industries grow and expand here in California. I think there are some tremendous opportunities there, and we're going to need strong leadership there as well.

So much of public funding from the state legislature, as well as federal and local government, encourages silo-like behavior on the part of public agencies-whether involving housing, schools, parks, police stations, libraries, or water quality. If you are elected controller, how could you use that office in a strategic way to encourage public servants to better collaborate in joint-use partnerships that creatively take advantage of the available dollars and limited land and resources in our inner-city and inner-suburban neighborhoods?

I think the controller's office, through membership on the State Lands Commission and through the CalPERS and CalSTRS system, can really focus more on the big picture and bring the different parts of government together and bring some synergy and joint planning.

You're absolutely right: there is a silo effect. People and agencies in the capital go about their business, and nobody talks to each other. But when you have an agency like the controller's office that stands over so much of government you have an opportunity to get different parts of government talking. Whether it's from an efficiency point of view, whether there's a synergy for investment, whether it's sitting on one of the many boards that oversee investment in the public sector, whether it's debt or tax credit you have an opportunity to look at the big picture and get agencies to work together.

For instance, if we're doing affordable housing tax credits, we can look at how to do that in conjunction with local policies and governments that encourage joint-use and smarter use of school sites, libraries, health centers, and things of that nature.

The controller has that ability because the controller sits on so many different boards and commissions that deal with those components: health care, infrastructure, tax policy, the State Lands Commission, etc. But I think you'll need someone in that office who's prepared to take the initiative, roll up their sleeves, look at the big picture, and figure out how to get people to work together. And that's something that I've enjoyed doing in the Legislature, bringing different groups that don't always agree together, and getting them to work on some common ground.