Three Candidates Vie For State Treasurer's Office
Voters may be forgiven for feeling unaware of the issues and candidates in the race for state Treasurer. While the Legislature gets to decide how the state spends its money, it’s the treasurer’s job to oversee the funds in the state’s bank accounts, and that includes pension funds for public employees.
Incumbent Beth Pearce is the Democratic nominee. But there are two challengers to the left of Pearce who are using their campaigns to highlight how Vermont’s financial decisions reflect on the state’s political priorities: Don Schramm is the Progressive nominee, and Murray Ngoima is the Liberty Union candidate.
One of the traditional priorities of the treasurer is the state’s bond rating. A high rating means the state can borrow money with the lowest possible interest. “That’s very important to taxpayers,” says Pearce. “It reduces the cost of government in terms of our borrowing it also impacts every single citizen in one way or the other.”
Pearce touts Vermont’s bond rating as the highest in New England. The state gets a AAA from two rating agencies and an AA+ rating from a third agency. She says that makes it less expensive for Vermonters to get certain student loans, mortgages from state-backed lending, and bonds for economic development. Pearce says strong financial management helps overcome other factors to earn the state a high bond rating. “There are things out of our control – there’s a world economy that has ups and downs, there are national events that impact the ratings,” she says. “But what we do have in our control is our fiscal responsibility and managing our finances, and I take that very seriously.”
But Liberty Union candidate Murray Ngoima argues the state bond rating isn’t that important. “The state bond rating becomes a moot point if you’re not floating bonds outside the state,” says Ngoima. She would rather the state not work with what she calls “megabanks.” “When we float bonds with those financial institutions, we incur interest and administrative fees. Our ability to pay that interest and pay those fees is what gives us our bond rating. Because we’re good, we’re good customers.” Ngoima prefers that Vermont be ‘good customers’ for its own public state bank.
On the question of how important is a good bond rating, Progressive Don Schramm is indifferent. “I’m not that knowledgeable about it. My overall sense is that it’s overrated,” says Schramm. “I often hear people say, ‘Oh! We have to be concerned about our bond rating!’ And I don’t understand the argument for that.”
Managing pension funds for teachers, state and municipal employees is also in the treasurer’s portfolio. The pension funds took a big hit in the Great Recession that began in 2008. Pearce, the Democratic nominee, says she’s worked to help the state recover from those losses since she became treasurer four years ago. “In 2010-2011, we made changes to the state and the teachers system,” says Pearce. “They’re saving the taxpayers about $20 million a year. We made a change to the health care on the teachers, that’s having an impact.” Pearce says the teacher’s pension fund had been chronically underfunded before the recession, and won’t be fully funded till 2038.
Liberty Union candidate Ngoima calls pensions “a promise” that Vermont has to keep with its state employees. But Ngoima’s priority for pension funds is getting that money out of certain investments. “The state pension fund does not have to be funded on blood money, we don’t have to invest in oil companies and fracking and armaments in order to fund the state pension funds,” argues Ngoima. “We just need to allocate the money we have promised people.”
Progressive nominee Schramm agrees that pension funds should be divested from fossil fuels. He says that’s only 0.2 percent of the portfolio, and it shouldn’t be hard to divest. He cites the work of 350.org in saying, “we need to tell these corporations that they cannot do this, they must leave three-quarters of their fossil fuels in the ground, period.” Schramm says, “the most direct way to deliver this message is by divesting from their stocks, giving them less money to drill new wells and strip new mountains.”
But Pearce says divestment isn’t that simple because a treasurer has a fiduciary responsibility to the 47,000 workers in the pension system. “We’ve done some analysis and those analyses indicate between $8.8 and 10 million of investment loss per year, not to mention the initial transaction costs to divest from fossil fuel,” says Pearce. “That cost is something that puts a dent in terms of our retirement security.”
A similar wedge between Pearce and her two challengers comes on the question of creating a state bank. Pearce is reluctant, her two opponents support it.
Schramm, the Progressive nominee, says all the cash that Vermont now keeps with publicly traded banks should be held in a public state bank instead. “First of all, we would save a million dollars in bank fees,” says Schramm. “But most importantly it would mean we would be taking that $350 million and investing it in Vermont enterprises. So it would an economic stimulus to the state.”
Liberty Union candidate Ngoima says another benefit of a state bank is ending relationships with institutions she says are morally challenged. “ “When we’re investing outside of the state in these federal or global corporate banks, we’re supporting things that I think [are] ethically wrong,” says Ngoima.
Incumbent Beth Pearce says interest in creating a state bank comes from anger at Wall Street. She says she shares that, but has reservations about starting a state bank. “There’s a couple of things: it adds risk, our financial advisors believes it would have a negative impact on our bond rating,” says Pearce. “There’s also the issue of capitalization. Where are you going to get the capital and how are you going to do that to create a state bank?”
All three candidates say the Vermont Economic Develop Authority is already doing some of the work that a state bank would do.
Each of the candidates also has projects that they would want to pursue as treasurer. Ngoima is an artist and arts educator, and she wants to elevate the concept of a creative economy in Vermont. Schramm says he’d support turning Burlington Telecom into a cooperative utility that offers service far beyond Burlington. Pearce wants to continue her work on increasing Vermonters’ financial literacy.
The state treasurer will be elected by voters on Tuesday, November 4.
Correction 3:40 p.m. An earlier version of this story identified Beth Pearce as the Democratic and Republican nominee. Pearce had the option of accepting the Republican nomination but did not.