Thursday, April 14, 2016

Former AZ Treasurers take a long view of Prop123 - and will vote no.

The Republic ( reports on the negative views of former treasurers about Prop 123. (h/t AZBlueMeanie at Blog for Arizona.)

The former treasurers' views stand in contrast to the near-lockstep support for Prop. 123 from the business community and education activists.

The only former treasurer to be in favor of Prop 123 is its architect, Doug Ducey.

Ducey is quick to note the land trust nearly doubled on his watch as treasurer and said the state has 9 million acres of land that will help leave the trust flush after Prop. 123 expires.

"Our kids have needs now," he said. The trust "will be worth more 10 years from now than it is today. This is a public trust managed to the benefit of teachers and students, not a private trust managed to the benefit of Wall Street."

But, despite his slap at Wall Street, Ducey is betting on Wall Street in two ways. He's betting that the expansion begun in 2009 will continue for another 10 years. An expansion that long has never before happened.

Ducey is also betting that the exceptional returns during the last 5 years will continue without any market correction or recession.

The past five years have been the best in the trust fund's history, delivering returns exceeding 7.4 percent. That's in part because financial markets have bounced back from the worst recession since the Great Depression. Matching that kind of performance for years more seems unlikely, the former treasurers said, and so does avoiding another recession for 10 years.

The current economic expansion began in June 2009 and is more than 73 months long. Since 1945, the average expansion has lasted 60 months, or five years. The longest lasted 10 years. The nation is seven years into the current expansion.

"There's more resources they could use for education. But the way that they crafted it they weren't interested in a long-term sustainable solution," said Dean Martin, who served as Arizona treasurer from 2007 until 2011. "You don't need to trust me. Ask yourself if you think a politician can predict where the market is going to be for the next 10 years."

The other treasurers weighed in.

"To me, it's a temporary political Band-aid on a long-term challenge that needs to be addressed by the Legislature," said Clark Dierks, the treasurer from 1979 until 1983. "They're going to take a big chunk of money out of something that was intended to be forever. I think that's wrong."

“I think they’ll damage (the trust fund),” said Ernest Garfield, who was treasurer from 1971 until 1973. “That was sacrosanct when I was there and I still consider it that way.”

Carol Springer, who was treasurer from 1999 to 2003 and held other elective offices, too, thinks Prop. 123 would set a worrisome precedent.

"The governor, having been a treasurer, should have understood that the trust is a pretty special trust. The idea that you can dip into it for temporary budget relief is a really, really bad idea," she said.

"Having been the chairman of the Appropriations Committee in the Senate besides being the state treasurer, I'm very familiar with the state budget. I understand how it works. ... If you can do this once, you can do this more than once. When times get kind of rough, you can just go tap that pot again. I just think that's such a violation of the concept of the trust in the first place."

For his part, Ducey thinks his current role as governor gives him a broader view.

"When you're the governor you have to be focused on the entire state," he said.

OMG. The whole state? What will Il Duce sacrifice next?

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