Candidates Q & A: State Treasurer's Race
This is the fourth in a series of responses to questions posed to the major-party candidates for the five contested statewide offices, to offer a glimpse into what they might do if elected. For the previous Q & As and full coverage of these races, go to www.rutlandherald.com/elections.
Q: In his dire financial forecast for the state and teacher pension system and retiree health care plan, noted accountant David Coates said “a major structural overhaul is the only solution to this growing fiscal problem.” Is he right? If no, what makes you believe the pension and retiree health benefits are on a sustainable track? If yes, what “major structural overhaul” would you recommend to the governor and Legislature?
Wendy Wilton: Our retirement systems face greater challenges than David Coates estimated. Rating agencies Moody’s and S&P announced they will apply tougher criteria on states with underfunded pension liabilities in 2014. Currently, the assumed rate of return on the pension investment is 8.25 percent; if the rate were reduced to reflect current conditions the underfunding would actually increase.
As Treasurer, I will work to stop the systematic leakages from the retirement systems that have occurred under my opponent to supplant the treasurer’s office or pay for excessive overtime. I will propose a realistic plan, with benchmarks, to complete the Treasurer’s Office’s Retirement System Re-Engineering Project. Started in 2005, this critical project is inexcusably behind schedule and my opponent has pressed certain employees into chronic significant overtime in the attempt to complete it, funded by the pension plans.
I will ask the Legislature to fully appropriate all resources necessary to operate the state Treasurer’s Office. Today, an astonishing 64 percent of the Treasurer’s Office expenses are paid from transfers out of our underfunded retirement systems!
I will propose that state government, municipalities and school districts review personnel policies, including policies on “spiking”, or excessive increases in overtime compensation, that create permanent, unintended, additional pension liabilities. In response to the Dugan scandal, I support tough civil sanctions, including the possible loss of pension benefits for any public employee convicted a felony committed on public time or using public resources.
These reforms will not, by themselves, address our staggering unfunded liabilities. However, these steps are absolutely necessary confidence building measures to establish our credibility to tackle the structural challenges to the retirement systems. I will initiate a transparent process, inviting public input, participation and accountability by all major stakeholders, to propose solutions to the structural challenges to our retirement systems.
My opponent expects the legislature unilaterally to impose a tax on Vermonters to cover these shortfalls. My preferred solution will draw on examples of successful multi-faceted pension reforms in other states, such as Rhode Island. I will also look to model prudently managed pension programs here in Vermont for solutions, like the Vermont Municipal Employees Retirement System, which is an enviable 92 percent funded.
Beth Pearce: Starting in 2005 when I served as Deputy Treasurer, the Treasurer’s Office has partnered to make incremental adjustments to strengthen our pension systems. In recent changes alone, these reforms save Vermonters $20 million dollars per year. National experts cite this work as a case study in pension reform.
Vermont has the strongest bond rating in New England. In their latest analyses, the nation’s three major bond-rating agencies acknowledged the structural changes to our retirement systems. These changes have put our systems on firmer ground and make them more affordable for taxpayers.
While our efforts to reform the pension system save Vermont taxpayers millions of dollars each year, there is still progress to be made and more work to be done. It is up to the Office of the State Treasurer to find the most equitable solutions to strengthen Vermont’s fiscal future.
I am also mindful of the promises we have made to our public servants. Hardworking state employees that play by the rules deserve adequate and reliable income in retirement. I pledge to explore options to keep our pensions strong while protecting taxpayer dollars, and keeping our word to retirees.
Protecting taxpayer dollars is about identifying problems, searching for solutions, and working collaboratively with Vermonters. I look forward to working with administrative officials, legislators, and employee groups to ensure that the Vermont taxpayer and Vermont workers receive equitable and fair pensions.
To Pearce: In what specific ways have the operations of the Treasurer’s Office changed since you assumed the office in January of 2011?
Pearce: Since becoming State Treasurer in January 2011, I have pursued a number of initiatives to improve our bottom line. Vermont’s continued prudent and proactive financial management has led us to the best state bond rating in New England.
Tropical Storm Irene stands as a reminder of the important work we undertake in the Office of Treasury. In the aftermath of Irene, we worked collaboratively with private and public entities to develop a range of financing alternatives. This allowed us to expedite $155 million in payments so that cash-strapped communities would have access to resources. These efforts provided towns with the tools they needed to rebuild when they needed them.
I am proud of the leadership the Treasurer’s Office provided to restructure our capital financing process. We worked with the Senate and House Institutions committees to make several changes to capital financing, saving taxpayers millions of dollars. These changes provided more dollars for capital financing, creating jobs and promoting economic development.
We have continued to work on our retirement systems to find savings while providing adequate and reliable income to retirees. Initiatives include investment portfolio restructuring, increased employee contributions, review of actuarial assumptions, and maximizing federal revenues where applicable. All of these measures have helped strengthen our bottom line.
As State Treasurer I am especially pleased with our efforts to promote financial literacy programs. We have designed programs that reach out to young Vermonters in schools and libraries, giving them the tools for a lifetime of good financial management.
In responding to all of these initiatives, we have assembled a record of excellence in the Treasurer’s Office. I pledge to continue this good work in my next term as your State Treasurer.
To Wilton: In what specific ways would the operations of the treasurer’s office change under your oversight?
Wilton: I would institute a culture of transparency because I know from my experience in Rutland that it works. I would begin the transparency project which I call Truth in Budgeting, as a pathway for our legislators and the citizens to understand our current state budget, our spending priorities and our current year performance. This information is not currently available on the state’s website, but should be. The Treasurer can provide this and in my view is the logical place citizens would be likely to look.
I would also institute policies regarding public records requests to ensure the Treasurer’s Office is compliant with the spirit of state and federal right-to-know laws. No one requesting information of the Treasurer’s Office should experience what I have in trying to obtain public information about the state’s finances, from the treasurer, which should have been simple answers.
Under my leadership the state treasurer’s office would again become a workplace of choice as it once was, and live up to its state mission to… “create a productive work environment”. The treasurer’s office at the City of Rutland became an employer of choice because I am a good manager with a sense of fairness and respect for the employees. I encourage people to learn, grow, and excel. High employee satisfaction equates to a more effective team environment and hence better value for the taxpayer. One of the reasons why Rutland was able to move swiftly on our financial recovery from a $5 million deficit is because the team was fully engaged. I was recently named Vermont Municipal Clerks & Treasurer’s Association-Treasurer of the Year, for which the staff deserves to share the credit.
Based on what you know right now, is single-payer health care a wise pursuit? If yes, what role should the treasurer play in accomplishing the goal. If no, how can you use the treasurer’s office to impede it?
Pearce: After 35 years in public finance, I have seen many changes in the way health care is delivered. Health care costs continue to soar. Governor Shumlin recently stated that single-payer health care is a means to “slow health care spending, freeing up dollars for jobs and economic growth.”
The State Treasurer does not set health care policy. That is the job of the governor and the Legislature. That said, I am personally supportive of health care reform as a means to address the issues of cost containment.
As the health care financial plans are developed, I will be an active participant in reviewing the financial ramifications, including the impact on revenues and expenditures, and state cash flow.
Health care reform should not be about politics. It should be about doing what is right for Vermonters. As Treasurer, I am interested in the state’s bottom line; our triple-A bond rating. A decline in the state’s bond rating would be a hidden tax on Vermonters. I will not recommend anything that will adversely affect our financial health.
Wilton: I do not know the answer to whether a single payer system is a wise solution for our health care system, which begs for reform. From the preliminary work I did in 2011 a single payer concept looks as fiscally unsustainable as the current system, with the difference that the liability will rest 100 percent on the state for any under-funding issues. My opponent has expressed complete support for single payer without any fiscal facts, which is surprisingly political for a theoretically unbiased financial professional.
In my view it will be the task of the policy makers to determine what the reforms will be. It is the task of the treasurer to ensure the reforms, whether single payer or multi-payer, are sustainable, at least for a reasonable period to protect the solvency of the state. This is an important check and balance to assure long term success for any reform enacted.
Who had the biggest impact on your political career? What did you learn from them? And how do those lessons show in your work today?
Wilton: My father Andy, who is not a politician, but a highly respected manager during his life-long career with the Vermont National Guard had the biggest impact on my career overall, political or otherwise. He knows how to motivate people and help others achieve their highest and best purpose. He taught me to carefully consider options before making a final decision, and seek out several viewpoints. Yet, he also taught me that there are times when you need to be strong to ensure things are done correctly and ethically.
Gov. Jim Douglas has also been an important influence on my political career. For me, Jim Douglas has been the gold standard for a candidate and public servant in Vermont for more than 35 years. Douglas’s example taught me the importance of reaching consensus in governing without compromising one’s principles of sound fiscal management and the need for an open and transparent political process. He has always been unfailingly generous in sharing his time, knowledge and experience with a younger generation of Vermont political leaders from both parties.
Douglas’ temperament is a perfect mix of self-confidence, driven by his command of complicated issues and his amazing ability to remember names and faces coupled with his wickedly self-depreciating sense of humor. It perfectly captures the center of the political spectrum for fiercely independent thinking Vermonters, like myself. It is no accident, that Governor Jim Douglas has received more votes for public office than any other public servant in the history of the state.
Pearce: In my long career in public finance, I have often turned to the example of Robert F. Kennedy. His rise to prominence was marked by privilege and struggle. Yet through it all, he demonstrated a remarkable commitment to his country and public service. This was most evident during the tumultuous year of 1968.
Five years after the death of his brother, President John F. Kennedy, Robert identified with the nation’s struggles. He sought out the best in people, looking beyond distinctions of race and socio economic status to cut to the core of the American promise – that each individual deserves dignity and a fair shot at a secure life.
As Vermont State Treasurer I have applied this ethic to the important work we undertake in our office. By taking proactive, people-centered steps, we foster long-term economic prosperity that puts Vermonters first. I look forward to continuing this tradition of excellence as your State Treasurer.
Two of the first super PACs to emerge in Vermont have focused heavily on your race. Why do you think this down-ticket campaign attracted such outsized interest in 2012, and has the outside money had a negative or positive impact?
Pearce: As I travel the state to discuss the important work of the State Treasurer, I am asked to describe my view of super PACs and the hundreds of thousands of dollars that my opponent has benefited from. Many Vermonters express concern about the effect money has on our elections, especially money that is shielded from public scrutiny. I share this concern.
Because of the Citizens United decision, super PACs have been able to inject unlimited amounts of money into the Treasurer’s race with little or no transparency. Since first forming in September, the Vermonters First super PAC has continuously funneled enormous sums of money on behalf of my opponent, artificially inflating her ability to reach voters.
I believe that Vermonters First targeted the Treasurer’s race because they see it as a bellwether to test how much money it takes to influence an election. They do so to advance a political agenda that is out of step with the values of our state.
As State Treasurer, I am most troubled by super PACs targeting this race because the Office of Treasurer ought to be focused on professional management and maintaining the state’s bottom line, not politics. I have extended this ethic to my candidacy by highlighting substantive issues such as pension reforms, conservative debt management, and our triple-A bond rating. I am proud of the clean, grass-roots campaign we have run and will continue to run.
Vermonters demand better than the partisanship Vermonters First has brought to this race. Come Election Day, it is my sincere hope Vermonters will send the message that the Treasurer’s Office cannot be bought.
Wilton: This is the first time the office of treasurer is being challenged in about 20 years. Additionally, voters are concerned about the financial future of our nation and how that may affect Vermont, and hence that’s why the interest has been high.
As provided by law, there has been no communication or coordination between my campaign and any of the independent PACs. I have no personal knowledge regarding their decisions to focus attention on the treasurer’s race. They appear to abide by the law and regularly report their receipts and expenditures.
Vermont is a small state. Politics are intensely personal. Vermonters expect to get to know their candidates and not just form opinions about them from advertisements or endorsements. For Vermonters, the function of the campaign process itself is often the most important factor in their decision making. So when I ran for Rutland City treasurer, I promised myself to run as the candidate I would personally want to meet, know, and support for public office. That is the same commitment I brought to my campaign for State Treasurer.
I greatly appreciate every expression of support I have received in this race. Every donation. Every volunteer. Every yard sign. Every bumper sticker. Every town hall participant. Every question. Every comment. Every handshake. I frankly don’t know the overall impact of independent PACs and influential, outside stakeholders on the Vermont political process. I do believe the resources committed to my campaign this year by independent PACs, as well as everyone else, are a recognition of my commitment to conduct the kind of grass-roots campaign that Vermonters rightfully deserve. As long as Vermonters continue to fiercely expect their candidates to personally ask for their vote, our political process should remain healthy.