EDITORIAL: In their words: Kounalakis, Caballero and Vazquez tell us why they can manage California's $162 billion
May 21-Getting your Trinity Audio player ready...
When Californians choose Treasurer Fiona Ma's successor in this June 2 primary, they will be choosing their state's banker, investor and asset manager. Termed out, Ma is now running for lieutenant governor, leaving this critical, technical role open for the first time since 2019.
Treasurers are not legislators; however, they play key roles in mobilizing the state's capital behind the Legislature's priorities. Last year, the California State Treasurer's Office was the agent of sale for $21 billion worth of bonds. And it managed $3 trillion in transactions and oversaw an investment portfolio with $162 billion in assets.
Whoever wins will serve on more than a dozen boards and commissions shaping how housing, hospitals and schools, among many other priorities, are financed.
Of the six official candidates, only three Democrats have war chests large enough to run viable campaigns:
- Anna Caballero, 72, is a Merced-based state senator. Previously, she served in the state Assembly, and she was secretary of the Business, Consumer Services and Housing Agency.
- Eleni Kounalakis, 60, is the lieutenant governor. A resident of San Francisco, she previously served as the U.S. ambassador to Hungary and led a Sacramento-based land development firm. (Bay Area News Group's editorial boards have endorsed Lt. Gov. Kounalakis. You can read why here.)
- Tony Vazquez, 70, is a member of the California Board of Equalization. He is a former teacher and was the mayor of Santa Monica.
Bay Area News Group's editorial boards asked these candidates a series of questions as part of our endorsement process.
Here are their answers:
What are the top three problems you're seeking to solve if elected?
Caballero:
Four issues define my campaign: affordable housing, access to health care, supporting clean energy projects and retirement security.
On affordable housing: I'll use bonding authority and tax credits to put union members to work building housing.
On health care: I will work to make health care more accessible and affordable through wise investments and supporting the creation of more health care facilities built by and operated by union labor.
On clean energy: I'll finance hydrogen, renewable fuels and transmission projects.
On retirement security: I'll protect and strengthen (the CalSavers) program so every worker has the dignity of a secure retirement.
Kounalakis:
1. Expanding affordable housing and investing in infrastructure: I will focus on modernizing the Low-Income Housing Tax Credit program, streamlining bond financing and accelerating the construction of affordable housing statewide.
2. Protecting retirement security and strengthening public pension systems: Protecting and strengthening CalPERS and CalSTRS is critical to the retirement security of millions of public employees.
3. Investing in the financial future of California's children and families: I will strengthen and expand programs like CalSavers, CalKIDS, ScholarShare 529 and CalABLE.
Vazquez:
1. Affordable housing: I'll sit on the California Public Employees' Retirement System and California State Teachers' Retirement System pension funds, which currently invest less than 2% in California (of nearly $1 trillion). I'd work to raise that to 4%, with an eye on affordable housing projects with comparable investment yields.
2. More investment in education: I see a need to work with unions on specialty apprenticeship and trade work programs, especially those helping to build California's infrastructure.
3. Health care: With higher pension fund investments in California, we'd be able to work with health organizations to help bring down costs.
Why are you uniquely qualified to solve these problems?
Caballero:
As the first female mayor of Salinas, I balanced the budget, expanded homeownership opportunities and reduced violent crime.
At the state level, I have a proven record of leadership and execution. As a cabinet secretary overseeing housing, financial regulation and consumer protection, I managed departments responsible for billions of dollars in state investments and the licensing of millions of professionals - experience directly aligned with the responsibilities of the state treasurer.
In the Legislature, I have consistently turned priorities into action securing major investments in infrastructure, housing and economic development, and authoring and passing legislation like the Distressed Hospital Loan Program.
Kounalakis:
I am the only candidate in this race with deep experience in statewide executive leadership, public finance and housing development. My background also includes global economic leadership as U.S. Ambassador and ongoing work as the governor's representative for international affairs and trade. The state treasurer manages trillions of transactions and billions of dollars in bonds that directly impact housing, infrastructure, pensions and affordability, and sits on the boards of CalPERS and CalSTRS. As a businesswoman, California's representative for international trade and current constitutional officer, I believe I am the most qualified candidate running for this office.
Vazquez:
My political experience from Santa Monica to the Board of Equalization has given me the opportunity to understand the strategic need to involve all stakeholders in helping to impact these challenges. We need to involve developers, educators, unions, nonprofit organizations and other elected officials to help solve these problems.
What differentiates you from your most serious competitors for this seat?
Caballero:
I was raised in a working-class family of copper miners, and I understand firsthand the financial pressures Californians are facing today. I've spent my career fighting for those communities first as an attorney for farmworkers, then as a mayor, legislator and cabinet secretary, bringing real resources back to underserved regions like the Central Valley and Central Coast.
I've managed budgets, implemented policy and delivered measurable results, securing investments in infrastructure and housing as well as authoring and passing legislation to keep hospitals open in vulnerable communities.
Kounalakis:
My campaign is built on a broad, proven statewide coalition and a disciplined, well-funded strategy to win. I bring strong statewide name recognition, a record of results and the support of leaders across California, including Gov. Newsom, State Treasurer Fiona Ma, State Controller Malia Cohen and Attorney General Rob Bonta. With significant resources on hand, our campaign is focused on turning out Democrats and working-class voters in every region of the state. The strength of my candidacy is rooted in deep experience with finance, housing and public investment at a moment when Californians are demanding competence, stability and results.
Vazquez:
As a former City Council member and mayor of Santa Monica, I have actually had a major role in running a city. I also have the ability to bring together all of the interests - labor unions, business and development, educational, environmental and cultural - to the table to not only voice their interests, but to also empower them to bring those elements to fruition. Currently, as a member of the California BOE, I have sought to level the playing field to make sure everyone is paying their fair share of property taxes.
What did Fiona Ma do successfully as treasurer?
Caballero:
She helped strengthen the state's financial standing by improving our credit ratings and refinancing debt to save taxpayers money, while also expanding programs that open doors for working families - like CalSavers for retirement security, ScholarShare 529 for college savings, and CalABLE for individuals with disabilities. She's also used the office to invest in affordable housing, small businesses and green infrastructure, demonstrating that the treasurer can both safeguard our finances and actively expand economic opportunity across California.
Kounalakis:
As treasurer, Fiona Ma helped strengthen California's fiscal foundation while expanding opportunity. She secured credit rating upgrades from Moody's and S&P, lowering borrowing costs for schools and local governments. She made the state's housing finance programs more efficient, streamlining tax credit and bond allocations to help finance tens of thousands of affordable homes. She also expanded programs like CalABLE and launched CalKIDS to support families saving for college. During the COVID-19 crisis, she provided steady leadership to stabilize municipal bond markets and ensure communities could continue investing in essential infrastructure and services.
Vazquez:
She was able to interface with many constituent groups in California. She made it a point to get out and interact with these groups and organizations.
What did Fiona Ma fail to do as treasurer?
Caballero:
Fiona Ma has had opportunities as state treasurer to more aggressively address California's affordability crisis and expand economic opportunity, especially in rural communities, but the office has too often taken a cautious, status quo approach rather than driving bold, targeted solutions. As a result, critical financing tools and investment programs haven't fully reached rural regions, where communities continue to face barriers to infrastructure funding, small business capital and economic development.
Kounalakis:
While Fiona Ma made important progress, key challenges remain. California still faces a severe housing shortage, and the state's financing tools - while improved - have not kept pace with the scale and cost of building affordable housing. The allocation process for tax credits and bonds can still be complex and slow, limiting how quickly projects move forward. Additionally, despite strong credit ratings, California continues to carry significant long-term liabilities and faces ongoing budget volatility tied to capital gains. There is more work to do to modernize financing tools, reduce costs and better align investments with long-term economic stability.
Vazquez:
I feel the treasurer failed to increase more of the pension funds investments in California. Both the CalPERS and CalSTRS pension funds, which control almost $1 trillion in funds, invest less than 2% in California.
The treasurer oversees the issuance of billions of dollars in bonds for infrastructure, housing and public projects. What principles would guide your decisions about when California should borrow, how much debt the state can responsibly carry and how to keep borrowing costs low for taxpayers?
Caballero:
First, borrow strategically, not routinely. Debt should be used for investments that create lasting public benefit.
Second, maintain responsible debt levels.
Third, keep borrowing costs low through sound financial management. We do that by maintaining fiscal stability, strong reserves and investor confidence in California's financial stewardship.
Finally, I believe we must be intentional about where those investments go. Borrowing decisions should help close regional and economic gaps - directing capital to underserved communities where strategic investments can drive long-term growth and opportunity.
Kounalakis:
California currently holds strong AA-level credit ratings, and my goal as treasurer would be to protect and improve those ratings. I would time issuances strategically, standardize bond structures and refinance when advantageous to reduce long-term costs. I will also strengthen coordination with local issuers and closely monitor market conditions. I will maintain conservative debt ratios to protect and improve our credit profile. My measurable goal is to keep the state's debt-service-to-General Fund revenue ratio below 6% - ensuring California can meet its obligations while preserving and strengthening our credit ratings, which directly lowers borrowing costs for taxpayers.
Vazquez:
I would make sure to have a strong financial team advising me on borrowing and the impact of state debt. By increasing pension fund investments in California, some of the borrowing can be offset. I believe we need to find the best opportunities to increase investment in California without impacting California taxpayers.
California faces massive infrastructure demands - from water systems and transportation to wildfire mitigation and climate resilience. What financing strategies or public-private partnerships would you pursue to fund these projects without placing excessive burdens on taxpayers?
Caballero:
We must leverage state funds strategically to unlock federal investment and attract private capital. That includes expanding the use of tools like revenue bonds, green bonds and resilience financing - so projects can be paid for based on the benefits they generate, rather than relying solely on broad tax increases.
I also support carefully structured public-private partnerships where they deliver clear value, but
only with strong transparency, labor protections and accountability to ensure the public always comes first.
My goal is simple: modernize how California finances infrastructure, deliver projects faster and more efficiently and ensure every dollar is used responsibly.
Kounalakis:
Central to my vision is building more: more housing, more hospitals, more clean energy and more resilient infrastructure. From modernizing the electrical grid and expanding battery storage to building solar, wind and geothermal infrastructure, as well as transportation infrastructure, it is essential to deliver these projects safely, on time and to the highest standard. As treasurer, I will use the state's financial tools, direct bond financing, financing authorities, procurement policies and pension fund investments to meet infrastructure goals and create family-sustaining careers.
Vazquez:
In all of my political experience I have always sought public-private partnerships to confront infrastructure challenges. For example, I was very successful in creating and working with the Joint Powers Authority (JPA), bringing together more than one financial resource. We used school district budgets, city budgets and community college budgets for development projects that benefitted these entities. We can use this same model to include statewide financial institutions and banking.
The treasurer manages several financing authorities that support affordable housing and small business lending. When and how would you expand access to capital, particularly for housing development?
Caballero:
I would focus on expanding access to capital by making our existing financing tools work better, faster and more equitably.
I would strengthen and better coordinate California's financing authorities to ensure we are deploying tax-exempt bonds, tax credits and loan programs as efficiently as possible. I would work to expand access to capital for affordable housing developers.
I also support using innovative financing tools, including public-private partnerships and credit enhancements, to attract more private investment into affordable housing.
I would prioritize equitable access ensuring that underserved communities, rural areas and communities of color have a fair shot at these resources.
Kounalakis:
We need to focus on certainty, speed and consistency. I support expanding by-right approvals for projects that meet zoning and affordability standards, strengthening enforcement of existing streamlining laws, limiting duplicative environmental reviews and creating clearer timelines for permits and inspections. From the treasurer's office, I will also prioritize financing programs that reward jurisdictions that deliver housing and help de-risk projects, so capital can flow more quickly. Time is money in housing, and delays directly translate into higher rents.
Vazquez:
Throughout my political career, building affordable housing has been one of my top priorities. When I was first elected to the Santa Monica City Council, we had access to the State Redevelopment Agency, which helped cities leverage local housing funds with state funds. We need to reestablish this agency so cities can help leverage their housing funds with state redevelopment funds.
The treasurer helps oversee investment of large public funds, including bond proceeds and programs that support retirement and college savings. How should California balance financial returns with policy priorities such as climate risk, social responsibility and economic development?
Caballero:
My first responsibility would be to protect the integrity, safety and long-term performance of public funds. That means making disciplined, data-driven investment decisions and maintaining a clear focus on risk adjusted returns for taxpayers, retirees, students and families who rely on these programs. At the same time, ignoring climate risk, governance failures or broader market vulnerabilities is not fiscally responsible - it is shortsighted. Climate change, supply chain disruption, stranded assets and poor corporate governance all carry real financial consequences. Incorporating those factors into investment analysis is simply prudent risk management.
Kounalakis:
I would tie financing decisions to measurable outcomes, such as housing units produced or projects completed on time. I spent over 20 years running our family business in housing development and have the experience to ensure taxpayer dollars are used responsibly, efficiently and deliver results. I would use every financing authority at my disposal to balance financial returns with policy outcomes. I am committed to a financing agenda that reflects the lived realities of working families, students, seniors and extremely low-income households while working within California's budget. The state shouldn't ask working Californians to shoulder the burden of our progression.
Vazquez:
If we were able to increase the investments of these large public funds in California, we could help balance and support our state priorities. We need to strengthen the infrastructure that allows us to invest more in non-fossil fuel energy sources, and to help the fossil fuel industry to prepare for the environmental and employment changes. The balance of California's priorities is a fragile one that will require a multilevel approach to its challenges. As treasurer, I would seek input from top experts in these fields to help maintain a service balance with fiscal health.
Are there causes for which you're willing to sacrifice return on investment on state employee retirement funds? If so, which and why?
Caballero:
I would not support sacrificing returns on state employee retirement funds for any cause. Our first and most important obligation is a fiduciary one - to protect the retirement security of public workers who are counting on those investments.
Incorporating factors like climate risk, corporate governance and long-term economic stability is not about sacrificing returns-it's about protecting them. Ignoring those risks can actually undermine performance over time.
Where California can lead is in identifying investments that both deliver strong, risk-adjusted returns and align with long-term priorities like sustainability, resilience and economic growth.
Kounalakis:
As a fiduciary, my top responsibility is protecting the long-term retirement security of public employees, and I do not support sacrificing returns for symbolic purposes. However, responsible investing and strong returns go hand in hand. Factors like climate risk, labor practices and corporate governance directly impact long-term performance. Integrating these considerations is not about sacrificing ROI, it's about managing risk and strengthening the portfolio. In limited cases where an investment poses clear long-term financial and systemic risk, it may be appropriate to reduce exposure or divest, but only when grounded in rigorous financial analysis and aligned with our fiduciary duty.
Vazquez:
I don't believe any cause should sacrifice employee retirement funds for ROI. As treasurer of California, workers can rest assured I would be a vocal and tireless advocate for defined benefits, lower medical costs and a dedicated workforce. I look forward to a future where we can discuss and advocate for strengthening benefits based on the success of high-performing state pension funds.
Are there specific companies, industries or countries in which you oppose investing? Please explain.
Caballero:
I would not support broad, politically driven divestment decisions that compromise returns or increase risk. However, I do believe there are circumstances where limiting or avoiding certain investments is appropriate particularly where there are clear, material financial risks or legal and regulatory concerns.
For example, industries or companies that present significant long-term risk - such as those heavily exposed to stranded assets, chronic regulatory violations or poor governance may not be sound investments. Similarly, investments tied to countries or entities that face severe sanctions, instability or lack transparency can pose unacceptable financial and reputational risks.
Kounalakis:
As a former U.S. ambassador, I have seen firsthand how geopolitical instability, corruption and weak rule of law can undermine markets. That experience informs my view that international investments must be carefully evaluated for political risk, sanctions exposure and human rights concerns. We should also be mindful of industries facing structural decline, such as certain fossil fuel assets, as well as companies with persistent labor violations or weak governance. Where possible, I support active engagement to improve corporate behavior - but when risks are significant and long-term, reducing exposure is the responsible course.
Vazquez:
My priorities would be to invest more in California and I would oppose any investment in companies building U.S. Immigration and Customs Enforcement concentration camps, arms dealers and countries advocating for armed conflicts over diplomacy.
In what ways would Bay Area voters particularly benefit from your leadership as treasurer?
Caballero:
I would prioritize expanding access to affordable housing financing using bonds, tax credits and public-private partnerships to accelerate the production of workforce and low-income housing.
I would support financing for major transit and infrastructure projects such as BART modernization, Caltrain electrification and expanded regional transit connectivity by leveraging state bonds and innovative financing tools.
I would strengthen California's small business lending programs and green financing tools to ensure startups and local businesses in the Bay Area can grow, hire and compete.
I would continue to lead on climate finance by investing in clean energy, wildfire prevention and climate-resilient infrastructure.
Kounalakis:
I will focus on expanding affordable housing by strengthening tax credit and bond programs, especially for projects near jobs and transit. I will also work to lower borrowing costs for local governments so they can invest in transportation, climate resilience and essential infrastructure. Just as important, I will protect pensions and maintain strong credit ratings, ensuring the Bay Area continues to attract investment, create jobs and remain a place where families can afford to live and thrive.
Vazquez:
As an immigrant myself, I understand the importance of equality, justice for all and the pursuit of the American Dream. The Bay Area is blessed with a multicultural population supported by residents of all walks of life, religions, sexual orientation and ethnicities. As treasurer, as I have always done in my political career, I would have a direct staff as diverse as the state I represent. I would carefully monitor the issues and concerns of all of my constituents and make sure the state treasury represents key investments that help all communities.
What more should our editorial boards know about why you're the best candidate for state treasurer?
Caballero:
I've spent my life guided by the values I learned growing up in a family of copper miners - hard work, fairness and making the most of every opportunity. Those lessons shaped my path, from working as a legal aid attorney representing farmworkers and underserved communities to a lifetime of public service at every level of government. I have served on the Salinas Planning Commission and Salinas City Council. I will bring that same commitment to managing California's finances. I've overseen large budgets, led complex state agencies and authored policies that expand access to housing, health care and economic opportunity.
Kounalakis:
As California's lieutenant governor, I serve on the boards of the University of California, California State University and the community colleges, giving me an unmatched understanding of the fiscal, workforce and infrastructure needs of our public education systems. While on these boards, I have helped oversee major capital planning and long-term budget decisions that directly affect students, faculty and working families. I have firsthand experience financing and building housing and infrastructure across California, giving me a practical understanding of how capital markets, public financing tools and local land-use policies affect housing delivery in the real world.
Vazquez:
For the last eight years (three of which were spent as chairman of the California BOE), I have helped Californians manage tax assessments and level the playing field for all business and property owners. I have advocated for the California BOE to strengthen consumer protections and directly communicate to all stakeholders the importance of understanding all of the services the BOE offers. In all my positions of leadership, I have been open to community interface, educational consultation and advice, and teamwork in meeting and overcoming all challenges.
Please note: Answers were edited for length and clarity. To read our endorsements in the most important Bay Area races and our interviews with top candidates, please visit: mercurynews.com/opinion/endorsements/.
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