Two Democrats, Board of Equalization member Betty Yee and Assembly Speaker John A. Perez, and one Republican, Fresno Mayor Ashley Swearengin, are the leading contenders to succeed John Chiang, who is termed out as State Controller. The candidates face a tall order in replacing Chiang. After eight years in the position, he has earned praise for his work to bring more transparency to California’s finances.

This is the first year the controller’s race will operate under the new Top Two Primaries system. Candidates can run from any party, or no party; and parties are reduced only to endorsements. The top two vote-getters on June 3 then will face off in the November general election.

Yee: 30 years’ experience

With 30 years of public-service experience, specializing in finance and tax policy, Yee is the natural successor to Chiang. Yee represents the Bay Area on the state Board of Equalization. That also is one of several boards that the controller serves as an ex-officio member. She says she’ll continue her work to be a responsible steward of the state’s finances, especially as the state faces a growing retirement bill.

“Retirement security is becoming a major worry for Americans and Californians as the national and state economies slowly climb from the stock market meltdown and housing collapse defining the Great Recession that began in the latter half of 2007,” Yee says of her priorities.

Her experience, going back to her days at the Department of Finance, has won her support from prominent state officials and political activists.

“Betty consistently has been on the front line as a civil rights and human rights leader,” said Dolores Huerta, the co-founder of the United Farm Workers. “The voice that she has carried for those unheard will be the voice of fairness she will bring to the office of Controller, where she will be a caring leader watching for the interests of Californians.”

Perez with fundraising lead

Southern California’s Perez cites his work in the state Legislature as evidence that he can help lead California’s economic “turnaround.”

“I want to run for controller so I can be involved in enforcing the level of fiscal discipline and stability that I’ve worked so hard to create with my colleagues and the governor,” he told the Los Angeles Times.

With $1.8 million in the bank as of the mid-May filing deadline, Perez has plenty of money to share his message with voters. He’s already spent $838,000, dwarfing the campaign spending of all his competitors. His remaining funds will be spent on a recently launched television ad, “Turnaround.”

“Gridlock, teacher layoffs and a $60 billion dollar budget deficit — that’s what John Perez faced when he became speaker of the California Assembly,” a female narrator says in the ad. “So he partnered with Gov. Brown to pass three balanced budgets on time for the first time in 30 years.”

Swearengin: Selling her mixed record in Fresno

In addition to Perez, Swearengin is selling herself as a turnaround artist based on her record in the Central Valley.

“Mayor Swearengin guided the City through the economic crisis, overcoming a cumulative $120 million operating shortfall and avoiding bankruptcy,” the GOP candidate says of “The Fresno Story” on her campaign website. “As Mayor, Ashley Swearengin aligned City Hall behind a vision and strategy for growing private sector jobs.”

But her record in Fresno also includes a record of secrecy and contentious fights with taxpayers. As previously reported here at CalWatchdog.com, Fresno is in the middle of a bitter dispute over the city’s water rates. Last year, the city refused to issue a title and summary for a referendum to overturn the mayor’s water rate hikes. Then, the city sued the taxpayers to prevent the initiative from entering circulation. The city says that the ongoing lawsuit is necessary to fulfill its responsibility to provide water to residents.

To date, the city has spent $232,000 in legal bills to stop the petition. Jon Coupal, president of the Howard Jarvis Taxpayers Association, described the city’s lawsuit as “a foolish and wholly unnecessary expenditure of taxpayer funds.”

Minor candidates factor in June race

Though not expected to make the run-off, three minor party candidates could be a factor in what’s expected to be a close race. Laura Wells, a Green Party activist and Bay Area financial analyst, wants to “implement a State Bank and tax the super-rich the way we did decades ago.” A perennial candidate, Wells earned 400,000 votes when she ran for the post in 2002. That was the highest vote count of any Green Party candidate in a partisan statewide race in California’s history.

Two lesser-known major party candidates could affect the race. Running “to assure accountability,” Tammy Blair, a Los Angeles Democrat who has 25 years of general business administration and financial management experience, could pull some Los Angeles-area votes from Perez, or female voters inclined to support Swearengin or Yee.

Likewise, David Evans, a Republican chief financial officer, campaigning to “rigorously pursue governmental abuse and waste of sacred taxpayer dollar,” could siphon off some GOP votes.

It’s the latest development in a bitter fight between the city and taxpayers. Last August, the city approved a controversial plan by Fresno Mayor Ashley Swearengin to double water rates in order to fund a $410 million upgrade to the city’s water system. But when a group of taxpayers led by former Fresno County Supervisor Doug Vagim objected to the plan, the city took the taxpayers to court in order to stop a referendum campaign.

Earlier this month, a state appeals court upheld a lower court ruling that ordered the city to fulfill its ministerial duties and issue a petition title and summary. Now the taxpayers say that the title and summary, as prepared by City Attorney Doug Sloan, are biased in favor of the water tax hike.

“Frankly, I don’t believe this Title and Summary filed by the Fresno City Attorney can be considered to represent an impartial statement of the purpose of the proposed measure,”  Vagim said  “This text belongs in the con-argument side of the ballot’s voter guide for Measure W.”

This is the full text:

“Title: Initiative Measure To Repeal City of Fresno’s Four-Year Water Rate Plan And Related Water Fees”

“Summary: A ‘yes’ vote on this measure would repeal water rates to be charged over four years that the Fresno City Council adopted on August 15, 2013, and cause the rates to return to what the Council adopted in 2008. The City Council adopted the 2013 water rates to pay for increased costs to provide adequate water that is safe to drink. The increased costs are caused by changes in state and federal drinking water standards, depletion of ground water, costs of maintenance and repairs to old water pipes and other parts of the water system, and the necessity to build a surface water treatment plant. If the current rates are repealed, the City Council could impose higher rates again. However, it would delay the City’s work to repair and improve the water system.”

Factual errors: Last water rate hike in 2010, not 2008

Vagim points to state law, which requires the city attorney to issue an impartial analysis. The Election Code states:

“In providing the ballot title, the city attorney shall give a true and impartial statement of the purpose of the proposed measure in such language that the ballot title shall neither be an argument, nor be likely to create prejudice, for or against the proposed measure.”

In the complaint letter submitted to the city attorney on Thursday, Vagim’s group cited factual errors in the title and summary, including the last time the city raised water rates. The petition summary references a water rate hike in 2008, when the last such increase passed the council in 2010.

“The prejudicial nature of this misstatement falsely informs voters that water rates have not been raised since 2008, when in fact rates were last increased in 2010,” the letter objecting to the petition summary states.

After five months of delays, the taxpayers say they’ll circulate the biased petition rather than wait for another title and summary. 

“Moreover, the City’s intentional, unreasonable and unlawful delay over the course of the last five (5) months has deprived my client of time to challenge the petition title and summary for petition circulating,” the complaint states.

If they can gather enough signatures, they’ll be looking for a revised title and summary before the election and could recoup legal fees and court costs in the process.

Fresno City Attorney: ‘Title is fair, complete and complies with the law’

The city attorney maintains that the title complies with the law. “We believe the title is fair, complete, and complies with the law,” said Sloan, Fresno’s City Attorney.

But the state’s leading taxpayer advocacy group contended otherwise. “The language is most certainly slanted,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association. “But we have not yet determined whether it crosses the line from the perspective of potential litigation.”

Earlier this month, CalWatchdog.com reported the story of the bully tactics by the City of Fresno in defense of Mayor Swearengin’s water rate increases. Under Swearengin’s plan, the average water bill would be doubled to fund a $410 million upgrade to the city’s water system.

In September, a group of taxpayers, led by former Fresno County Supervisor Doug Vagim, organized a campaign to overturn the rate hikes. But the taxpayers were denied a title and summary for their petition. Without a title and summary, the group couldn’t collect the necessary signatures to get a referendum on the ballot.

City of Fresno sues taxpayers

Then the city sued the taxpayers in an effort to stall the petition from reaching the 2014 ballot. In late November, a Superior Court sided with taxpayers and ordered the city attorney to issue the title and summary. Instead of compiling with the court order, the city filed a notice of appeal, which stayed the court’s order, as part of a strategy to run out the clock on the initiative.

The city of Fresno is facing major financial problems after years of fiscal mismanagement and irresponsible spending. It owes $3.4 million per year in annual construction bond payments for a city-owned minor league baseball stadium. The bond payments were supposed to be covered by a $1-per-ticket fee collected by the team. However, City Manager Renena Smith told the Fresno Bee in November that the team is two years in arrears. To solve its cash flow problems, the city had to borrow $14 million from the water department to balance its books.

Fresno Bee: Thumbs down to Fresno Mayor Ashley Swearengin

Even supporters of the water rate hike have become disgusted with the city’s hardball tactics. Shortly after the first ruling, the Fresno Bee editorial board, which backs the water rate increases, chastised Swearengin.

“We support the water-rate increases; they are vital to the city’s future,” the paper wrote. “But with these stalling and blocking tactics, Swearengin sends a message that she doesn’t trust Fresno voters to do what’s best for the city.”

The “stalling and blocking tactics” stopped the referendum from reaching the June 2014 ballot. To qualify their proposed initiative for the regularly scheduled November 2014 election, taxpayers would need to submit 4,846 valid signatures to the City Clerk by May 8.

The battle began last August, when the city of Fresno approved a controversial plan pushed by Mayor Ashley Swearengin to raise the city's water rates. The additional revenue would go towards a $410 million upgrade to the city's aging water system.

Under Swearengin's plan, most water users, which include city residents and some unincorporated parts of Fresno County, would see their average monthly bills rise to $48, double what they were last year. That didn't sit well with a group of taxpayers, led by former Fresno County Supervisor Doug Vagim, who mobilized a grassroots effort to overturn the rate hikes.

But when the taxpayers tried to circulate a petition to overturn the mayor's plan, the city took the extraordinary step of refusing to grant the petition a title and summary. Without a title and summary, the group couldn't collect the necessary signatures to get a referendum on the ballot.

The move appears to be a direct violation of the California Constitution. Section 3 of Article 13C states that “the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge.”

Pre-emptive strike: City sues taxpayers

Not content to block the initiative, the city went a step further: It sued the taxpayers.

“The City anticipates Initiative Proponents will continue to advocate for the Initiative and its submission to the voters,” its lawsuit states. “By seeking pre-election relief, the City hopes to avoid the cost and expense of submitting an illegal and invalid Initiative to voters.”

Attorneys for Fresno made the remarkable argument that the city's lawsuit would restore the public's trust in government that had been eroded by the courts.

“The voters already fear that everything they vote on ultimately gets invalidated by the courts anyway, and we don't want to feed that fear by letting plainly invalid measures get presented to the voters,” the city's attorney, Michael Colantuono, argued in Fresno County Superior Court.

Taxpayers said that the city was using the legal system to undermine their constitutional rights.

“Our constitutional rights are being infringed on on a daily basis as we're denied the ability to go to the voters to seek their approval,” Chuck Bell, one of the state's preeminent election attorneys, argued on behalf of the taxpayers. “Frankly, we still have the hurdle once a title and summary is issued to retain the requisite signatures of a sufficient number of voters to qualify the measure for the ballot.”

In late November, a Superior Court agreed, and ordered the city attorney to issue the title and summary. Instead of compiling with the court order, the city filed a notice of appeal, which stayed the court’s order, as part of a strategy to run out the clock on the initiative.
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'Core public service not subject to referendum'

Swearengin's office did not respond to an email request for comment on the issue. However, at a press conference last month, the Republican mayor said that the city's interests in managing the water business trumped citizens' rights to petition their government.

“The city of Fresno believes there is ample case law that indicates that a core public service is not subject to a referendum,” she said. “I recognize the short-term pain of raising water rates in the city of Fresno. However, I believe this short-term pain will result in long-term gain for the people of Fresno.”

Much of the city's financial problems stem from years of fiscal mismanagement and irresponsible spending. In a November speech to the Rotary Club of Fresno, City Manager Bruce Rudd acknowledged that “the reality is this organization has always ran close to the edge.”

Among the city's money-pits: a costly city-owned baseball stadium for the town's minor league team, the Fresno Grizzlies. The city owes $3.4 million per year in payments toward the stadium's construction bonds. The bond payments were supposed to be covered by a $1-per-ticket fee collected by the team. However, City Manager Renena Smith told the Fresno Bee in November that the team was two years in arrears.

Which all comes back to the city's water problems. To make up for the cash it wasn't getting from the baseball team, the city had to borrow $14 million from the water department to balance its books.

Fresno Bee turns on mayor over her hardball

Even supporters of the water rate hikes have become disgusted with the city's hardball tactics. Shortly after the first Superior Court ruling, the Fresno Bee editorial board, which backs the water rate increases, chastised Swearengin.

“We support the water-rate increases; they are vital to the city's future,” the paper wrote. “But with these stalling and blocking tactics, Swearengin sends a message that she doesn't trust Fresno voters to do what's best for the city.”

The “stalling and blocking tactics” have already proven effective at stopping the referendum from reaching the June 2014 ballot. If the 5th District Court of Appeals doesn't set aside the stay, taxpayers won’t get a title and summary until May, and the referendum would miss the November ballot. To qualify their proposed initiative for the regularly scheduled November 2014 election, taxpayers would need to submit 4,846 valid signatures to the City Clerk by May 8.

The next scheduled election would occur in 2016, by which time the city is expected to have bond funding contracts in place.