Gov. Schwarzenegger Creates First-in-the-Nation Recovery Act Inspector General

GOVERNOR SCHWARZENEGGER:  Anyway, we are here today to make an announcement to create a new position, which is inspector general, so that we can watch the federal dollars that are coming in from the Recovery Act and that someone watches it carefully, because it's very important to have efficiency there and transparency. And so we found someone that is perfect for the job.

But anyway, when President Obama signed the American Recovery and Reinvestment Act he made it clear that the taxpayers must be protected and that there has to be accountability and transparency, which is absolutely essential. Americans must know that these dollars are being used for their intended purpose, which is to create jobs, to stimulate the economy and to help those that are most in need.

And I'm 100 percent with President Obama on this issue. Californians deserve to know exactly how the Recovery Act dollars are coming into our state and how they are being spent. There are $50 billion coming into our state from the federal government.

Now, we have families losing their health care coverage, so they deserve to know that there is $15 billion in health care coming in that go directly to community clinics that can be used for medical care.

We have also so many roads and bridges and infrastructure projects that are being built from our 2006 Infrastructure Bonds but there's an additional $7 billion coming into California. And people ought to know that that coming in will create more infrastructure projects and also more jobs, because, as you know, 18,000 jobs for every billion dollars that we spend on infrastructure projects.

The people deserve also to know that there are $13 billion we will receive for education. This money will go directly into the classroom and not be wasted on bureaucracy.

They deserve also to know that there are $3.5 billion for energy that will go to clean projects and will help the state move forward in green technology and also a renewable portfolio.

We have a 10.5 percent unemployment rate in California, so I think there is this $8 billion that is coming from the federal government is very welcome, and it's specifically designed for the unemployed and for those most in need.

The people deserve also to know that their stimulus dollars are going towards creating jobs now and we will make sure that this is not being used for building maybe swimming pools or golf parks, or other frivolous pork projects.
Last week I created a task force to oversee the hundreds of funding streams. As you know, it's very complicated. There are hundreds and hundreds and hundreds of pages of documents there and we have to kind of weed through that and see what moneys are due to California. So we want to make sure this task force will make sure that we're tapping into as many dollars as possible, and to make sure that we are meeting the deadlines, which is very important, and to make sure that we are using those dollars efficiently and effectively.

I named Cynthia Bryant to be the head of this taskforce. Cynthia Bryant is the head of OPR and has worked with me since 2003 and has been part of great reforms, including the Workers' Comp reform that has saved businesses now -- we have seen reductions up to 70 percent in Workers' Comp costs. We've also launched a website,, so that taxpayers can log on and see exactly where and how the stimulus dollars are being spent.

Today I'm adding another layer of accountability. I'm creating an inspector general to focus on nothing else but the federal economic stimulus funds. California is the first state in the nation, by the way, to appoint such a high-level independent officer to police this funding. And Laura Chick, the Los Angeles city controller, will fill this very, very important role and we are very happy that she comes on board. We estimate that California, as I said, will receive $50 billion. Some of this will go to the state, some of it will go directly to the cities and counties, some of it will go to the school districts, some to nonprofits. No matter where the dollars go, Laura Chick will be there watching it very, very carefully, let me tell you.

Laura has a great track record of rooting out problems in Los Angeles. She has saved the city hundreds of millions of dollars by audits of consulting contracts, airport contracts, city pensions, and the list goes on and on and on. So we are very happy to have her.

All of us on this team are about job creation, job creation, job creation, and helping our economy through this very difficult time. We are also all committed to being accountable to the people, which is so important. Accountability is extremely important, just as President Obama has insisted that it is, so we are 100 percent with him on this.

And I will sign now an executive order so that I then can officially introduce to you our inspector general. Let me sign this.


Now, ladies and gentlemen, let me introduce to you our Inspector General Laura Chick. Please.

LAURA CHICK:  Thank you. Thank you very much, Governor Schwarzenegger. I am honored to be part of your team. President Obama and Vice President Biden called for accountability when they launched the Recovery Act. It is very clear that Governor Schwarzenegger is equally dedicated to making sure that this money goes for what it was intended for; creating jobs and revving up our economy. I am going to Sacramento to deter, detect and disclose any waste, fraud or abuse of these precious taxpayer dollars. My mandate from the Governor is to make sure that these funds are spent wisely and well and that we get the biggest bang for every single buck.

As Los Angeles city controller I have spent eight years scrutinizing how the city does business and shining light on what goes on behind closed doors in city hall. I am bringing that same passion, determination and commitment and energy to this new job as your inspector general.

And of course, sadly, in accepting this position, it requires that I leave the city controller's job two months early. I want to thank the people of Los Angeles for their support over the past 16 years. It has been my privilege to serve you, and I ask for your continued support, and that of all Californians, in this challenge that faces all of us.

Thank you very much, Governor, for your confidence.


GOVERNOR:  Thank you. Do you have any questions to any one of us?

QUESTION:  Yes, Governor, just two questions. Were there any particular aspects of the controller's background that drew you to her for this job?

GOVERNOR:  Well, first of all, she has been a public member of the Board of Governors of the California State Bar, and she has worked for us and I have watched her work here in Los Angeles. I can't think of anyone that is more efficient and more effective in getting in there and looking at where the waste is, and her audits have produced and saved tremendous amounts of money for the city of Los Angeles.

If she does that kind of a job, which I'm counting on, for our state when this federal money comes, which is $50 billion dollars. And we know when $50 billion comes to our state that there will be problems if we don't have someone watching over that.

And I think that we have to always understand this is not a gift from the federal government, from Washington. This is our money. The state of California pays more on federal taxes than we get back, so I've been fighting for the last five years to get more money from the federal government. So here is now $50 billion, unexpected, coming to the state. We want to make sure that the taxpayers know this is their money and that we are watching it very carefully, so there is transparency and there is accountability and efficiency there.

And I cannot do that. I cannot do that job and run the state. We need someone specifically for that. This is why I think it is so important to have someone, an inspector general, to do that. And we're very happy that we are the first state to step out forward and to say we need to show accountability and we're going to create this job.

QUESTION:  And just as a second question -- some have questioned why you were on vacation in the past week instead of campaigning for the ballot measures. Do you have any comments on that?

GOVERNOR:  Yes. I am always very good at balancing my work with my family life, because my family is extremely important. And this my kids' Easter vacation and so it was important for me to go on vacation for a few days with them.

QUESTION:  And you feel pretty confident about it?

GOVERNOR:  I feel very comfortable with my vacation.

QUESTION:  I know.

GOVERNOR:  I had a good time -- I had a good time. And when it comes to our initiatives, we are going to continue campaigning up and down the state to get as many endorsements as possible, to raise as much money as possible and to communicate to the people of California why it is absolutely essential that those initiatives pass, all six of them, 1A through 1F.

QUESTION:  Are you worried that some of the new numbers -- showing that you may have to go back to the budget, reduce spending, possibly raise revenue, that we're in worse shape than we were when you passed the package -- that that will prompt people to perhaps not support those measures?

GOVERNOR:  I think it is very important to know that the legislators, Democrats and Republicans, have done an extraordinary job on these budget negotiations. It's the first time in the history of California that we have had a budget five months early, because ever since I've come into office I always complained about them being late with the budget.

And so they were five months early and it's natural, when you do a budget in January, that you will have to make some adjustments with numbers. That's why we have such a thing as the May Revise, where we always make revisions then.

And I think that, again, both parties will come together on this. There has been a very, very good working relationship established in Sacramento. I am very pleased that, because of us sitting down and negotiating for three months, there was a certain trust that was developed, which was very good.

So I think that many more things will be accomplished because of that trust and because of this kind of close relationship.

QUESTION:  I don’t think I asked my question very well. I guess, what are you going to say to voters who are going to say hey, these measures, these six measures, won't even fix the budget, which has gotten worse since these measures were proposed?

GOVERNOR:  It will fix the madness and the roller-coaster ride that this state has faced the last 60 years. Because let's not forget that for the last 60 years we didn't have a rainy day fund, and that's why you see these ups and downs in our revenues. I mean, every time the state has a little cough we have a drop in revenues by 10, 15 percent. So the whole think is out of whack, and we don't have a rainy day fund where we can draw from when the economy goes down.

So we spend all the money when we have revenue increases, when we have surges in revenues of 13 percent, or under the Davis administration, 23 percent. All of that money was spent. Regardless, if you're a Democrat or a Republican, or whoever is sitting in there, if you don’t have those guidelines and if you don't say you can't spend, increase spending by more than 5 percent and the rest of it goes into a rainy day fund, Democrats and Republicans always will spend all the money. That's just the way they do it in the Legislature. They love to spend money.

I think here is the only way to stop them from spending and to bring in consistency and to save our state, so that we never have to go back to the people and say we have to raise taxes or make those severe cuts to education, to health care, to law enforcement, to prisons and all this. This is horrible. We have a dysfunctional system, and this is why it is important that the people vote and approve those measures, Proposition 1 through Proposition F.

QUESTION:  Well, that argument flies on that measure. But the argument initially for the lottery funds measure and for the transfer of the mental health funds and other measures, was that hey, this will fix the budget problem. And now it won't be enough to fix the budget problem.

So my question to you is, what argument will you now make to voters to convince them to vote for those measures?

GOVERNOR:  There is no argument. You just have to then make more cuts and you have to make adjustments again. But the fact of the matter is if, for instance, they don’t pass, we'll have another $6 billion to $7 billion hole, that we'll have to make severe cuts -- and we don’t want to make any cuts. So, therefore, I think it's absolutely essential that they pass. And I think the people of California know that this is the only way to go in order to bring control, and keep spending under control.

QUESTION:  Governor, at a time when you've got state workers furloughed with some time with no pay -- the state has a controller already. Why bring in somebody from the outside? Another budget line, she's getting $175,000 a year. By the time you assemble a staff -- I don’t know what the final figure will be, I’m sure more than 175,000. How can you justify that when there are people in the state who are not getting paid one or two days a month? Why can't the existing controller do that?

GOVERNOR:  Well, we want to make sure that the money, the $50 billion, is watched very carefully and that there is total accountability and transparency. We want the taxpayers to know that their dollars are being spent wisely and on the right projects, no pork projects or anything like this.

And, as I pointed out earlier, I think that Laura has proven in Los Angeles that whatever salary she gets here is worth it a hundred times over, because she has saved the city hundreds of millions of dollars by just auditing and watching those things. And she will do exactly the same. This is the wisest investment that we can make in our state, to have someone like her there and watching over every single dollar.

QUESTION:  By why can't the controller, who is now in place, do it?

GOVERNOR:  It's impossible, when you already have such a big, enormous job, then to go and watch specifically for the $50 billion. Remember one thing, that President Obama made it clear that, if this money doesn't get spent the right way, the money is gone. If we don't draw this money at the right time, with the deadlines and so on, the money is gone. Use it or lose it.

So we want to make sure there is someone that is in charge and to have a taskforce in charge of that, to know exactly what monies we can get from the federal government, but then we have an inspector general there to make sure that it is spent wisely.

I'm telling you, that when I go up into the neighborhood, the thing most often that I hear from people when they come up to me, they say, I hope someone is watching over this money. That is the people's concern. The people want to have this money being spent, they want to receive the $50 billion, but they want to make sure that this doesn’t go off for some pork barrel spending or for someone building a swimming pool or a golf course or something like that.

So I would like to also have you maybe answer this questions.

LAURA CHICK:  Yes, well, I would. Thank you, Governor. I'm certainly not looking to have an army built up around me. You know, it's in my bloodstream, to watch and count the dollars. So I'm going to be looking to work with the state controller, I’m going to be looking to work with the state California auditor and the Legislature, just as the Governor does.

But I very much agree with what he just said, that every dollar spent on an inspector general watching this money is going to end up saving a lot of money. I made a commitment to the Governor that my goal is to not have to return a single dollar. That's my hope. And a lot of this work can be done at the front end, in a preventative way, and in educating, rather than at the back end when it's always more expensive.

QUESTION:  Laura, do you know how much money is budgeted for your new office?


QUESTION:  By that I mean personnel, and --

LAURA CHICK:  Oh, no, no. And that will be largely up to my working with the taskforce. But they already have heard from me; I'm not looking to build an empire. I'll be looking to use people who are already working with the state. The Department of Finance has auditors that they're going to be ready to allocate to this. So the team effort is going to come from already exiting resources. There are not going to be cadres of new people hired. That's not the Governor's intention and it's not mine.

QUESTION:  Governor, could I ask one other question? Well, first of all, parenthetically, as a golfer, don't beat up on the golf courses too much.

GOVERNOR:  I don't. As a matter of fact, remember one thing. I always said I hope there is a golf course on every corner in California and all over the world. But we don't want to build it with government money and with taxpayers' money.

QUESTION:  How serious is the current budget problem? I know we've got the May Revise coming up. But what can you tell us about -- I mean, the controller, I think it was two weeks ago, painted a pretty bleak picture in terms of the availability of credit as well as just lowering, plummeting, tax revenues. Can you tell us what the latest is?

GOVERNOR:  Well, first of all, let me just say that the important thing here is that Democrats and Republicans are working very well together. And we are very much aware that as time goes on that the revenues could be less than anticipated -- which in a slipping economy is always the case -- so we have calculated that in. And we will be fixing this problem without any fights. There will be not fights this year over a budget, because we all are in sync.

And we all know one thing, and that is that we've got to go and work together to stimulate the economy, because that will bring back revenues as quickly as possible. Our number one interest is to go and create jobs as quickly as possible, because when people work they pay taxes, they spend money, and that's what gets the economy going.

So this I why this federal money is so very much welcome. And as President Obama has said, it will create more than 300,000 jobs here in California over the next two years. And that's what I'm looking forward to, because every person that is out of     work -- I mean, think about it, that you go to your family now and you can't provide for them. You don't have the health care, can't pay for school and all this. I mean, it breaks my heart when you hear some of those stories.

So for me the most important thing is to get people to work and to do everything that we can. And this is why I think Laura Chick's job is so important, because imagine if she saves us a few hundred million dollars, of how many more jobs that can create. So this is why we need to be very efficient here and show accountably and transparency with the website and all of those kinds of things.

Thank you very much, everyone, for being here.