How your tax money is invested
Commentary y Martha Ireland
Friday, April 25, 2008
Clallam County, WA - Clallam County has $35 million deposited in the state treasurer’s Local Government Investment Pool, while Jefferson County has $27 million tucked away there.
“It’s a very safe yet liquid investment,” Assistant State Treasurer Allan Martin explained at a Tuesday dinner forum, in Sequim.
The event was sponsored by the Republican Women of Clallam County, of which I am the secretary.
The pool paid $101 million in interest to local governments across the state last year.
“We’re maximizing the return from idle cash to pay for government services, without taxation,” Martin said.
Return on local investments is a little above 5 percent.
Or that, the state retains “a hair” as its management fee, he said.
Martin is Treasurer Mike Murphy’s top aide. Murphy, a Democrat, is retiring and has endorsed Martin, a Republican, as his successor.
The post is partisan, but the job isn’t.
In fact, Martin advocates making the office non-partisan, like Clallam County’s treasurer.
Asked who’s running against him, Martin said, “I never mention their names,” but added that the two announced Democratic candidates are economists who have “a different skill set.”
The candidates are Dr. Chang Mook Sohn, state Economic and Revenue Forecast Council executive director, and state Rep. Jim McIntire, D-Seattle.
Martin, a former private sector banker and elected Chelan County treasurer, has the right skills, said Jefferson County Treasurer Judi Morris, who introduced him.
Morris, a Republican, and Mason County Treasurer Lisa Frazier, a Democrat, co-chair Martin’s bipartisan campaign, which boasts endorsements from 28 county treasurers, Clallam County Treasurer Judy Scott is among them.
Safety, liquidity and interest rates are their top priorities.
On the borrowing side, economy of scale saves taxpayers millions in interest, on a cumulative $13 billion worth of bonds, Martin said.
Using competitive bids, rather than negotiating rates, the state treasurer issues the bond, writes a payment schedule and invites six or seven New York banks to bid against one another on the interest rate.
“Banks had move away from doing public sector banking,” Martin said. “We created a market and got people in there so you’re getting lower rates.”
In 2003, the voters approved the treasurer’s request for a school bond guarantee program, eliminating the need to buy bond insurance.
“We have to keep re-educating school districts that they don’t need to buy that,” Martin said.
At $800 million to $1 billion, Washington’s debt limits and borrowing rate are higher than most states.
“Washington is geographically and geologically challenged---all our road projects are expensive,” he said.
Besides funding building and transportation projects, bonds purchase items such as school buses and public hospitals’ diagnostic scanners.
Additionally many state grants come from borrowed proceeds.
“I’d like to put (that information) on the Web site,” Martin said. (The treasurer’s office Web site is www.wa.gov/tre). “You’re paying for [grants] over 30 years.”
Port of Port Angeles Commissioner Jim McEntire was pleased to learn that the port ---with about $9 million in debt---could keep its bond fees in state rather than exporting them to New York.
“Under $10 million total per year, you can do locally,” said Martin, who teaches municipal finance workshops.
MeEntire also asked whether we’re financially prepared in the event of a major natural disaster.
Counties can issue interest-bearing warrants, such as Yakima County used to pay for cleanup when Mt. St. Helens erupted, Martin replied.
“It’s not a check, so banks don’t like them---it’s a promise to ay that can be issued with no cash backing it,” he said.
“Banks want to wipe those statutes out,” said Martin.
That’s just one example of how “other interests run at the Legislature all the time,” to change financial laws for their private benefit, he said.
“The treasurer has to step up to them and say no.”
Martha Ireland was a Clallam County commissioner from 1996 to 1999. She and her husband Dale, live on a Carlsborg-area farm. Her column appears every Friday. Email: Irelands@olypen.com
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