According to a report this year by outgoing State Treasurer James McIntire, Washington had $20.6 billion in debt at the end of December, 2015, up from $18.2 billion at the end of 2011. Last year, the Tax Foundation ranked Washington ninth highest of 50 states in per-capita state and local debt.
The finalists for state treasurer place a different level of emphasis on the state debt, and on limiting future tax hikes. Following the August 2 Washington state primary election, the top two vote-getters for the office are both Republicans, Duane Davidson and Michael Waite.
It will be the first time the GOP has held that state-wide office since 1956. General election voters will still have a choice. Davidson and Waite may share a party label but they take different approaches to communicating, and have different policy priorities. Waite is far more outspoken against tax hikes and the current level of debt.
A Fiscal Hawk Versus A Quiet Collaborator
Waite stresses his private sector finance background. He favors using the office as a bully pulpit to oppose new taxes and more state debt. Benton County Treasurer Davidson says although he shares similar views with Waite, he wants to focus on enacting less partisan policies, such as localizing public investment opportunities. He also believes the treasurer should avoid promoting specific legislative policies.
Waite told Lens it is time to have a finance professional running the treasurer’s office rather than a professional politician. He manages more than $10.7 billion in assets as the senior vice president at Bentall Kennedy. He also previously worked at Cascade Investment, the private investment firm of Microsoft co-founder Bill Gates.
Waite Would Stress ‘Cost Of Debt’ And ‘Raising Taxes’
Waite said, “What will be different under me is you will get someone who actually uses the office to help the legislature and the community truly understand the cost of debt, the cost of raising taxes.” He added that he would also accent “healthy alternatives” to more taxes and debt.
In his report, McIntire wrote, “the annual total debt service bill has reached $2 billion” for the state.
Davidson believes his ability to work with officials of both parties will appeal to Democratic voters left with only two Republicans to choose from in November. “I get along well with many Democrats…because when you go to work you’re a treasurer for all of them,” he said.
Davidson told Lens one of his main focuses will be on localizing investment opportunities. One way to do this is allowing county treasurers to invest in public work projects within their county. “Exercising greater control over what can be invested in, makes sense,” he said.
The different approaches to the job could come into play during the 2017 legislative session, when lawmakers may be faced with new tax proposals.
Lawmakers Will Be Paying Attention
The treasurer has “a lot of influence in how he is able to present the facts” regarding state finances, said State Rep. Vincent Buys (R-42). Buys is a member of the House Appropriations Committee.
State Sen. John Braun (R-20) told Lens that the insight of the state treasurer on issues such as long-term debt is something “we take pretty seriously.” Braun is the vice chair of the Senate Ways and Means Committee.
House Capital Budget Committee Chair Steve Tharinger (D-24), told Lens, “I’m not sure the partisan issue is that big…as long as someone is a good money manager. The treasurer’s job is to manage the state’s dollars in an effective way, making wise investments, and making sure the dollars are growing in value but they’re also not being lost.”
Among the responsibilities of the state treasurer is handling the cash transactions of all major state accounts. This amounts to more than $400 billion annually. The officeholder also sets policy for investing the active balance of the state, and issues general obligation bonds to finance state projects. The treasurer serves on the State Investment Board, State Finance Committee, and the Economic Development Finance Authority.
Democrats Lose An Ally
Having a Republican in the office for the first time in six decades will deny Democrats an advocate for their preferred budgetary solutions at “a time of tremendous tax upheaval,” said Comerford. Both Davidson and Waite oppose the progressive income tax for which Mcintyre had advocated.
“I think it could be significant, obviously if Governor Inslee wins reelection,” Comerford said. “He’s going to have to work with the Republican in the treasurer’s office.”
Both Braun and Buys believe no matter who wins, a Republican treasurer will lead to increased public awareness about Washington’s $20 billion debt.
“Many times in the past we have pretty much maxed out the credit card,” Buys said.
Davidson and Waite had won 25.21 and 23.37 percent of primary election votes cast for the office, respectively, as of Monday morning, August 8. The closest competitors were State Sen. Marko Liias (D-21) with 20.16 percent, and Democrat John Paul Comerford with 18 percent. The other candidate was Democrat Alec Fisken, who had 13.26 percent.
Comerford had advocated for a state income tax, as had a prominent endorser of his candidacy, outgoing Treasurer McIntire.