Vermont Public has been speaking with candidates for statewide office in the lead-up to Election Day, and today we're sharing conversations with the nominees for state treasurer.
Incumbent Democrat Mike Pieciak is seeking reelection to a second two-year term. He lives in Winooski and previously served in the Vermont Department of Financial Regulation, first as deputy commissioner in 2014 before being appointed commissioner two years later.
His challenger, Republican Joshua Bechhoefer, is a newcomer to politics who lives in Cornwall. Bechhoefer graduated from the University of Vermont with a degree in economics, and now works as a credit analyst.
Vermont Public’s Mitch Wertlieb recently sat down with Pieciak and Bechhoefer to talk about the treasurer position. Bechhoefer begins with how he views the position within state government, while Pieciak describes what he would prioritize during a second term.
Transcripts are generated using a combination of speech recognition software and human transcribers and have been lightly edited for concision and clarity. They may contain errors, so please check the corresponding audio before quoting in print.
You can also read additional written responses from both candidates in Vermont Public's candidate questionnaire.
Joshua Bechhoefer
Joshua Bechhoefer: The state treasurer manages and stewards the treasury. So the investments that the treasury makes through the state pension is the responsibility of the treasurer, as well as providing pointers to the state Legislature on the state of the treasury, our bond rating and making sure our bond rating is good, and providing advice and finding ways to improve our bond rating so the rate at which the Vermont taxpayer borrows is lower. The state treasurer, whoever it is, is the interface with the creditors on behalf of the State of Vermont.
Mitch Wertlieb: Lots of responsibility, obviously. Why do you want the job?
Joshua Bechhoefer: I work as a credit analyst. As somebody who understands credit, the state has to ensure that it has a good amount of liquidity on hand. It has to ensure that the debt coverage ratio is good so our unfunded pension liabilities are under control. And there will be shocks in the economy — how do we best brace ourselves for those shocks? And I believe I'm better positioned than the current treasurer, and that is something that I think that the current leadership has struggled with.
Mitch Wertlieb: When you talk about things like Vermont's bond rating and making sure that we're good with our creditors, what can the state treasurer actually do to help achieve the best possible outcome in those areas?
Joshua Bechhoefer: The major drag on a credit rating is, like any business, the amount of debt they have to the amount of revenue that they bring in. There isn't much we can do on the revenue side. However, on the debt side — in structuring our debt — there are things we can do because that's our pensions. And so we can say, “Hey, what if we had an option – for example, defined contribution plans — or some other structure from which we pay and meet our debt obligations?”
I think [incumbent Democratic Treasurer] Mike Pieciak doesn't really want to touch the issue. I understand why: because the people who work for the state deserve to retire in dignity, but he doesn't want to make it look like he doesn't want to do that. Whereas I'm willing to open up the can and say, “Hey, we should have a real discussion about how our population is aging, our revenue base is potentially shrinking over time, and we should have a talk about restructuring and making sure that our pensions are fully funded or we're paying as we go with a defined contribution plan.”
Mitch Wertlieb: You mentioned the administration of Vermont's pension funds. That's a big part of the job. If your candidacy for state treasurer is successful, how would you handle the administration of those pension funds?
Joshua Bechhoefer: So the big elephant in the room, I think, is BlackRock — the primary place where we've invested. I think that's deleterious to the state of Vermont.
Mitch Wertlieb: Can you briefly explain BlackRock for those who wouldn't be familiar with it?
Joshua Bechhoefer: Yeah, BlackRock is a financial management company that offers pension products to individuals, states, municipalities. And it has about $10 to $11 trillion under management. Through all these investments in BlackRock, it facilitates the purchase of single-family homes, which injures Vermonters in a huge way — especially people my age. I'm a little younger, and I'm looking at housing. And it's difficult, because they put an immense amount of pressure on the housing market, even if it's not necessarily in the state of Vermont itself. Around the state of Vermont they buy homes, and it is a demand effect. Pushes out the demand curve for housing, and our supply is not rising to match that. So it drives the equilibrium price of housing up. So that's one thing we can do with the pension.
Mitch Wertlieb: When you say one thing we can do with the pension, meaning take a different tack? Work with somebody else? I mean, what would be an alternative?
Joshua Bechhoefer: It's difficult, because BlackRock is a very competitive company; there's a reason it has so much money under management. We would have to look at alternatives towards spinning it off. And nobody can tell me, “We can't do something about this,” because we already have. If you look at the pensions, or you look at your 401k matching, it says “excludes tobacco.” What if we had “excludes single-family homes” or residential housing or something to that effect? So we would have to look and negotiate, and I don't see that happening under Democrats. That's a major motivator for running, certainly.
Mitch Wertlieb: You’ve laid out some of your differences with Mike Pieciak. I wonder if there's a big philosophical difference, though, between the two of you in regards to the post of state treasurer?
Joshua Bechhoefer: I think Mike Pieciak is OK with investing millions of dollars into things without a cost-benefit analysis. As an economist, I think that's wrong. I think it's a matter of diligence, talking with people and understanding their issues. I think Mike, perhaps, definitely tries to do that. I've seen his campaign trail, and he does talk to people. But I think it's a lot of photo ops. He's also raised $340,000, and $100,000 of it is out of state. So he's the big dog, and I'm the underdog. So that's how I sort of try to explain it to people. And it is true, he has an immense depth of resources that I don't have.
Mitch Wertlieb: One last question, Joshua. You've alluded to this — you know that Vermont is an overwhelmingly blue state, as it were. How do you make the case to Vermonters that as a Republican, you would have their best interests at heart, even if they don't believe in the Republican philosophy? I mean, certainly Gov. Phil Scott is a very popular governor as a Republican. But are you making that same kind of case? Would you describe yourself as a Phil Scott Republican, for example?
Joshua Bechhoefer: Yeah, I don't consider myself to be in the same strain as many national Republicans. We are the Vermont Republicans. We're the party of Vermont. That's what we're trying to be. And that's what we used to be, you know, when George Aiken was governor and things like that. I think we can rebuild that today. I don't see any reason we can't, and it's necessary because I think we need to have parties that are going to be taking different tacks in different states, because that's what's necessary.
Mike Pieciak
Mike Pieciak: Investing in housing is just such a critical issue. We have such a shortage in our state, and it's impacting our economy — but it's also impacting us in a whole host of social issues as well. Obviously, we have the second highest rate of homelessness per capita. We have a challenge in terms of treating mental health and substance use disorder, tied back again to our shortage of housing. Even medical costs; the ability for hospitals to hire doctors or nurses is really challenged. It’s also the number one driver of inflation.
So we have about $30 or $35 million left to invest, but one of the areas of focus would be on senior housing as well. I think that's going to be the key for us over the next decade — making sure there are places for seniors to be able to step down out of a larger home, so that a younger family can have that home.
Mitch Wertlieb: What can the state treasurer actually do to achieve success in the area of housing? I would like to stick on that, because that is a big, big issue.
Mike Pieciak: Yes, what we did in our first term is we had this program called LIAC: Local Investor Advisory Committee. It allows us to invest up to 10% of the state's cash on hand into economic development. So what we did with that program is we expanded it by $100 million. We prioritized housing, and then we also decided to provide low-interest loans to developers. Given this post-pandemic period where prices were rising significantly, interest rates were high. We heard from a lot of housing developers that their project wouldn't be able to go forward in the current interest rate environment. So by providing low-interest loans through important partnerships like the Vermont Economic Development Authority, the Vermont Housing Finance Agency, some banks and credit unions, we were able to help those projects go forward that otherwise would have stalled.
Mitch Wertlieb: Administration of Vermont's pension funds will again be a big part of your job, if your candidacy for state treasurer is successful. How have you approached managing those funds so far, and would you have any big goals in a second term?
Mike Pieciak: Right before I was elected treasurer, I served on the pension reform task force. Those recommendations passed the Legislature, and during my first term, we wanted to make sure they were all fully implemented. At this point, they are all fully implemented, and we've seen three years in a row where the liabilities have come down, and the funding ratios have gone up. In the not too distant future, our pension liabilities are scheduled to be paid off completely. That's 2038.
One of the things the pension reform did was front load some of those costs so that in the out years, we would have less of an increase. I was worried about our ability to pay those years closer to 2038; now I'm much more optimistic. They're scheduled to go up in a much more gradual way. And from an inflationary budgetary standpoint, it’s actually going to be easier for us to make those payments as we get out to 2038.
Mitch Wertlieb: I think I've read in some previous interviews that you were concerned about Vermont being divested from fossil fuels in Vermont's pension fund system. I'm just wondering if there's any significant amount of Vermont pension fund money that's currently invested in fossil fuel interests, and whether you would approve of getting out of those interests?
Mike Pieciak: Yeah, so I was in favor of a bill called S.42, which would have divested Vermont pension funds from fossil fuels over time. We want to make sure that we're not overexposed to the fossil fuel industry. My perspective is that their financial returns are not going to be as good over the next 15 years as they have been over the last 15 years. So I was in support of that bill. It passed the Senate, did not pass the House.
But one of the things that came up during that legislative process was a requirement that the entity that oversees the investments do an analysis to see how much of the portfolio is in fossil fuels. And it turned out that it was about 2%, so a pretty small amount. The exposure has been coming down over time. I think we want to continue to go in that direction and also find opportunities to invest in green energy technology. Because part of the question is, when you divest, that's part of it. But then where do you invest? And continuing to look for those opportunities will be important.
Mitch Wertlieb: As state treasurer, you've been a big proponent of something called a baby bonds initiative that will invest $3,200, I believe, for each Vermont child born on Medicaid. This goes into a state trust fund, and then that grows and it gets dispersed back to those kids when they become adults. I'm curious why you were so focused on getting a pilot program approved by the Legislature this year for the baby bonds?
Mike Pieciak: It's often discussed that the difference between owning a home or not — or renting — is that down payment. So a baby bond would provide those born into poverty economic opportunities. And it would disproportionately benefit our rural economy, because in Vermont, that's where the vast majority of children born into poverty are. Is in those more rural counties, like in the Northeast Kingdom.
The other thing it does is it encourages people to stay or to come back to Vermont, because you have to be born in the state, and then you have to be a resident of the state at the time that you claim your baby bond. And then the uses of the baby bond are to buy a house in Vermont, start a business in Vermont, higher education, or rolling it over into your retirement. So those really tie you into the Vermont economy and encourage you to stay.
Mitch Wertlieb: Mike Pieciak, you've already raised more money in campaign contributions than any other statewide incumbent, and this is despite facing a Republican candidate in the general election who was a write-in; he's got very little statewide name recognition. I'm wondering, why do you place such a large emphasis on fundraising, and how do you think you've gained more traction there than other statewide candidates?
Mike Pieciak: We always work hard on whatever we're setting out to do, and reelection is no different. We have to earn everybody's vote. We wanted to run a campaign that got us out and about throughout the state, talking about the work of our first term. And you know, that takes money to be able to do that in a way that lives up to that standard that we want.
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