DENVER — As a member of the Joint Budget Committee for the past four years, retired math teacher and term-limited State Representative Dave Young has had a front row seat to how every department of the state functions.
As a self-made entrepreneur and CEO of an investment firm, Brian Watson has spent most of his career managing other people’s money.
Despite two very different paths to the Colorado Treasurer’s office, both men believe they have the skills necessary to do the job.
As different as their experience is, what they’ll do when they get there is equally different, in everything from the role the Treasurer should play on the Public Employees Retirement Association (PERA) board, state policy formation, and the Taxpayer’s Bill of Rights (TABOR).
“The Treasurer sits on several boards, the big one being the PERA board,” said Young, the Democrat nominee. “Having sat on the joint budget committee, I see the financial crisis the state is in. We a have a deep hole in every aspect of our budget, and it’s because we have the most restrictive tax and expenditure provision in our constitution of any state in the union. The collision of TABOR and Gallagher — they are working against us.”
The Gallagher Amendment is a provision in the Colorado Constitution passed by voters in 1982 that made major changes to property tax assessments in Colorado, including lowering the tax burden immediately on certain types of property and exempting certain property (such as household furnishings, non-business personal items, business inventory, livestock, and farm or ranch equipment, to name a few). Most importantly, perhaps, is Gallagher limits how fast the assessed value can grow on residences. Because residential property value has grown much faster than commercial property, residential assessment rates have dropped from 21 percent in 1982 to 7.20 percent today. Over the same time period, however, inflation adjusted property tax revenues have risen from $1.35 billion in 1982 to nearly $9 billion in 2017.
TABOR is another amendment to the Colorado Constitution. It was passed by voters in 1992. It limits the growth of government to the annual inflation rate and population change. It requires government entities to take all new debt and tax increases to voters.
“I will use my business experience to help the legislature be a positive force in addressing the budget issues the state has,” said the Republican nominee Watson about working under Gallagher/TABOR restrictions. “I will meet with them as well and work with them. I think the people of Colorado have made clear their priorities.”
While Young would like to explore divesting PERA investments from gun manufacturers; supporting changes to TABOR; and changing the way oil and gas production is taxed, Watson would refuse a salary and PERA membership, recommend vetting all PERA investments and support an all of the above approach to energy production.
Young and Watson sat down with Complete Colorado to talk about their plans for the office, if elected in November.
Why run for Treasurer — On the JBC for four years, “I also got a pretty good view of what goes on in the Treasurer’s office. I think I bring the skill set that is well suited for that department. The budget is $30 billion, $7 billion flows through the Treasurer’s office. It is all connected to the budget, and the work done in the appropriations committee. I was chairman of the appropriations committee. The money in there has to be well invested, safe and liquid so that when the budget comes out of the appropriations committee, you can pay the bill.”
What is the role of Treasurer — “Make sure the money is wisely invested, safely invested and transparently invested. Avoiding risky investments is a big thing. Work with school districts; tax revenues come in in an unequal way, but payrolls have to be made on a monthly basis so sometimes there is some work the Treasurer’s office has to do with the school districts to make sure they have a cash flow situation.”
TABOR — “The influence or roll (of the Treasurer’s) job description doesn’t preclude the Treasurer from collaborating or working with others to say we need to do something about this. Because these items are in the constitution, these items are in the hands of the voters. I think that there are better tools. I think most people like the idea of being able to vote on their taxes. I think people like the idea of refunds. But that is only in the context of have we met the essential needs of what we think are appropriate needs of government? I think most of us agree that it is a bad tool. There are lots of things about TABOR that we continue to uncover and learn about, even 25 years later. At the end of the day, it results in more debt, less good planning and more crisis planning, and as a result, we’re not really maximizing or effectively using taxpayer dollars.”
PERA – “In 2000, (PERA) was 105 percent funded. The talking point at that time was that since this was taxpayer money, we shouldn’t ever have it be overfunded, so an option was given to members to buy service credits that were not employer matched. At the end of the day, if you are buying credits, you are making yourself eligible sooner. So, if you’re not paying the full cost of that, where does the money come from to pay your benefits when you retire? On top of that, people are living longer than ever, so now you’ve got a system out of balance.”
GUN CONTROL – “Gun safety has ballooned up in the legislature rightfully so because we see things that happen in schools that we don’t like. PERA has money invested in gun manufacturing. People are upset. There is a recognition that there are many companies and corporations that are really great community partners that really hold up more than just shareholder value but have doing good for the community as a goal as well. When people don’t think a company is doing (good), pressure get put on it, and maybe that’s impetus for them to change. (PERA’s investment in gun manufacturers) is one that has to be carefully vetted. You don’t want your investment strategy to result in PERA being hurt, but at the same time, if the members of PERA, who are the ones that voted in the PERA board, ultimately say we don’t want our investment portfolio to look this way, and in general the citizens of the state of Colorado agree, you can change that over time. And maybe it will provide some incentive for a company to make some changes. I would work toward understanding the investment strategy and have that conversation.”
ENERGY – “Oil and gas are nonrenewable assets of the state of Colorado. If you look at other states and what they’ve done, overall Colorado has a very ineffective tax rate. We are in the bottom one third. Others have taxed it higher and they also have been smarter about how they’ve invested it. I think we should weigh in on that. It’s how we invest in ourselves. Are we just going to diminish our resources and let them expire without getting full benefit? Is there a better way to invest the proceeds on that so the state can reduce its tax load in other areas? If we would have done something different 20-30 years ago, I think you would have seen a different trajectory. That doesn’t mean we can’t start thinking about it now.”
OTHER IDEAS — “We get a balanced budget in the state every year and people are like, ‘oh that’s good.’ In my estimation, we are just cost shifting. And if you look at the big picture, we are in great debt. The Treasurer can’t fix this alone, but the Treasurer can use the bully pulpit to help find ways to do that. To advocate and work with the state legislature, work with other elected officials and work with communities to say how do we become more effective and responsive and work as a problem solver. I can go down the list where there is a deep hole from our inability to meet the need or cost shifting that’s gone on. I think you have to take a step back and say, ‘are we going to continue to play this game of reaching into one hole and pulling a little bit out to put into that hole,’ or are we actually going to say what is an effective solution? We’ve allowed ourselves to be in a crisis mode due to the TABOR and Gallagher collision.”
Why run for Treasurer — “I’ve always had a heart to serve my state and my country. I looked out and said, ‘where can I help?’ I’ve been doing investments my entire career. I want to bring that experience to the Treasurer’s office to make a positive difference because at the end of the day, this stuff matters.”
What is the role of Treasurer — One is to act as Chief Financial Officer of Colorado, so when the state writes a check it can actually be cashed. Two is to serve on the (PERA) board. The Treasurer also oversees the unclaimed property fund. There is $1.3 billion in there now, and what most people don’t realize is, the state legislature has already pre-committed more than $500 million of that. Colorado needs a Treasurer that really understands whose assets those are. The Treasurer is also the flag bearer regarding financial matters for the state of Colorado. We need someone who is well versed and experienced about financial matters and is going to put forth those ideas and speak to the people about those issues.”
TABOR — “I believe in TABOR. We need to put these things forward for the people to decide on, to give them choice and opportunity with regards to what the state is spending money on. People like my opponent want to take that choice away from the people and just spend the money and have the government control the money. TABOR is absolutely vital and one of the stark contrasts between my opponent and I.”
PERA — “One of the most important issues of the state Treasurer in serving on the PERA board. PERA is a people issue not a partisan issue. (Teachers) are depending on a retirement, and we have a responsibility to make sure that it is healthy and sustainable for them. Hands down it is the single largest debt obligation for the state of Colorado. Frankly it’s a ticking time bomb that if we don’t get it fixed, it could down grade the credit rating for the State of Colorado, which means things like bridges and roads are going to cost a lot more because your debt is going to cost a lot more. We need a Treasurer that is going to go in there and be positive and proactive. First thing I’m going to do is call every single PERA board member and take them out for coffee or lunch and get to know them as people and say how can we work on this to solve this issue. Senate Bill 200 took a step in the right direction. But even then, it’s still a $28 billion obligation. PERA lost 11 percent of its value in the down economy. That is over $20 billion. I am a big believer in teachers. If you want to give teachers a pay raise, fix PERA; 22 percent of their salary is going to PERA. If we fix PERA they are going to have 11 percent more of their take home pay in their pocket.”
GUN CONTROL — “I am a pro Second Amendment person. I believe in our constitution. Gun issues are on people’s minds. We need to make sure we have safe environments; one way is through more education and training and respect for weapons. I don’t care what side of the aisle you are on, I want to work with you to figure out a sustainable solution.” In response to PERA’s investments in gun manufacturers: “We need to look at all the investments for Colorado and make sure they are diversified and that there is asset allocation. In terms of pulling money out of one group and sending to another, people like my opponent have no problems when it comes to gun manufacturing for our military and protecting us from foreign powers. But then all of a sudden, they do have a problem when it’s on our own domestic soil. I think we need to have good conservative investments for the state of Colorado as well as diversified asset allocation.”
ENERGY — “Fossil fuels are big drivers of the economy in our state and they create great quality jobs. I am a proponent of new technology and energy saving efficiencies, but I believe in letting the free market work. To me it’s an all of the above approach, fossil fuels, renewable, solar power, water. etc. I think in Colorado we’re going to come up with new industries and new jobs that we don’t even know yet, but you can’t abandon one and just jump on this bus of saying were going to get rid of what’s been the back bone of our states jobs and economy.”
OTHER IDEAS — “I want voters to do a job interview; look at experience. I’ve been doing investments my entire career. I came from humble means, shoveling horse stalls to put myself through college to building a company from nothing to over a $1.3 billion in assets around the country, so every day I’m looking for the best investments. I’m the only candidate who’s been in a fiduciary responsibility with other people’s money. I’m a steward. I will not take a salary. I will do my small part to reduce the burden of government. I’m not going to cash the check, and I’ll be the only person on the PERA board not accepting PERA.”