The West Orange County Regional Chamber of Commerce welcomed special guest California State Controller John Chiang at the group’s chamber luncheon at Knott’s Berry Farm Resort Hotel on Thursday, Aug. 29. He gave an update on California’s current budget and cash position, and talked about the state’s fiscal future. Chiang became controller in 2007, just before the start of the Real Estate down-turn, and said he believes in letting people hear the facts. “I want people to understand information,” Chiang said. “You have to be honest with public information that people need to see.” California is currently the 9th largest economy in the nation. “We were the 5th largest economy at one time but we were just growing slowly,” Chiang said. “July 13, 2007, we were the 8th largest world economy, but then we went cash-negative and that’s not a good long-term trend. The state became reliant on borrowing to meet its financial obligations.” As the State’s fiscal watch dog, he said that at the end of 2007, during the national recession, California’s unemployment rate was at 5.9 percent, and 1.34 million jobs were lost. The losses came from three major areas of taxes: personal income, sales, and corporate, which affected the state budget. Personal income taxes comprise 60 percent of the State’s revenues “Education is the largest expenditure that comes out of the general fund through your tax dollars,” Chiang said. “Healthcare and welfare is the second largest expenditure.” Medi-Cal is the largest portion of the state’s health and human services budget, he said, and while children make up the highest number of enrollees in Medi-Cal, the most spending is on seniors and people with disabilities. “One-half of the money spent on seniors goes to nursing homes,” he said. “People don’t like to hear they are going to be paying for their parent’s health care.” Chiang said in 1933 the sales tax was created during the industrial and agricultural period of time, but California is a service-based economy today. “The more you know about your own company as far as revenues, the better you are,” Chiang said. He said america offers opportunity but we must be smart in how we handle our money. Sept. 23, 2008, AIG was in the middle of a financial melt-down and France, Spain and Europe were watching America. “We must be smart about our future and pay down our debt,” Chiang said, noting that California during the fiscal crisis earned comparisons to the country of Greece, which Chiang said was unfounded, noting that it would be similar to comparing California’s economy to one the size of Riverside. In issuing IOUs in 2009 for only the second time since the Great Depression, Chiang said that was his way of protecting California over the long haul. “I owed you $2.6 billion in tax returns but from July 2, to Sept. 10, I as the controller, didn’t have enough money to pay you because education gets their money first,” he said. “We got over that rough patch and paying down our debt makes sense. Pay first the person you owe the most – with 3 million kids being educated, you don’t want to be a school district the government takes over.” Chiang said unless something changes drastically, kids and grandkids cannot compete in the world. “To be educated in America opens a world of opportunity,” he said. Chiang said the state is starting to pay down its debt and the State’s revenues were $4.5 billion ahead of the estimated budget as of April last year. Chiang’s main point was that it is important that the business community and government work together to grow the economy. “California needs you now, more than ever, as this is a pivotal time, but we can make it.” In comments after the meeting, West Orange County Regional Chamber of Commerce President/CEO Connie Pedenko said the goal of the chamber is to provide stakeholders in the organization with transparency and insight into the local economy. “The Chamber’s mission is highlighted in our ability to create networking opportunities amongst local businesses, while also representing business in local and national legislation,” she said. “It is extremely important; that we keep our Stakeholders informed as often and as quickly as we can, about issues that effect business. The State Controller John Chang did an excellent job, and was very detailed in his presentation.” For more information about Chiang and the State Controller’s Office, visit www.sco.ca.gov/ For West Orange County Regional Chamber of Commerce information, call 714-484-1420.
