Spaulding 'takes care of the money'
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State treasurer Jeb Spaulding in his office in Montpelier. Despite the sagging economy and the loss of nearly $1 billion in pension funds in the last year, Spaulding says the cash position of the state remains strong. Jeb Wallace-Brodeur/Times Argus |
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By Susan Allen Times Argus Editor - Published: December 1, 2008
MONTPELIER – Jeb Spaulding couldn't have known it when he first ran for state treasurer in 2001, but he picked a tough time to be state treasurer.
It's the treasurer's job to look out for the financial interests of Vermont. He takes care of the money.
Unfortunately, it's also this treasurer's job to watch nervously as the national and state economies head south.
"It's challenging," Spaulding said last week, seated in his Pavilion Building office, a wall of windows offering a view of the Statehouse where he served as state senator for Washington County from 1985 to 2000.
He oversees everything from Vermont's payroll to investments to debt management to pension funds, and more.
And by law the state treasurer sits on the boards of several organizations, including the Vermont Economic Development Authority and the Vermont Student Assistance Corp., each facing challenges as the economy tanks.
"The financial challenges we are facing are huge," Spaulding said. "It can be scary – I was trying not to use that word."
He said when the U.S. House first voted down a $700 billion economic bailout package on Sept. 29 – the chamber came back just days later and passed a similar plan – he was truly worried. "Holy mackerel," Spaulding said, recalling that first vote.
In a long-term sense, so much is riding on the national economy and a turnaround. Vermont's pension funds have lost between 35 to 40 percent of their value, about $1 billion, in the last year, Spaulding said.
Yet, he quickly cautions, "For people that depend on benefits, their benefits are there. We're built to withstand these fluctuations."
Vermont's investments are based on long-term outcomes, and barring "a cataclysmic event" that drives the nation into a long-term depression, can withstand this downturn as long as the economy returns to normal in a couple of years.
"The last three or four years, we've made 15 to 17 per-cent per year … we did pretty well," he said. "We knowingly take a certain amount of risk, with a 30 to 50 year horizon. I'm not worried about the long-term impact on pension funds."
In addition, he said, "The cash position of the state is still strong, as strong this year as it was last year," Spaulding added. There's money in the bank to make payroll and send out state aid to education checks. "We've got plenty, more than enough to make our payments.
"That's not like other states," he added.
For a guy considering running for governor in 2010, Spaulding has also gone out on a political limb recently in calling for what essentially amounts to a 5 cent increase in the gasoline tax — $20 million that he would specifically earmark for repairing or replacing Vermont's deteriorating bridges. That money would also leverage another $150 million in bonds (which have a dedicated funding source and therefore won't impact the state's bond rating).
This places him at odds with Douglas, whose administration favors raising motor vehicle fees to pay for bridge repairs.
Spaulding said gasoline taxes are paid by out-of-staters, spreading the road costs among those who actually use the roads. Fees are only paid by Vermonters, even those who seldom drive and therefore put little wear and tear on roads and bridges.
"The bottom line … we know our roads and bridges are going to be repaired sooner or later," he said. "The longer they deteriorate, the more expensive it will be. We are going to pay. The question is, are we going to pay more?"
And moving quickly to raise dedicated funds for bridge repair and getting those projects under way this spring would put Vermonters back to work and give a boost to the state's economy, as well.
I ask why Vermont shouldn't we wait to see if Congress will send highway dollars our way.
While he's hopeful of federal assistance, "I've never been one to wait for somebody else to bail us out."
He said the timing for a gas tax increase is good because gasoline prices are so low, and the cost of labor and materials for road and bridge repairs are low given the sagging economy.
"My own take is we're falling behind," he said. He realizes that many people will balk at the suggestion of a gasoline price hike, but added, "I'm banking on the fact that people can understand there is no free lunch."
"People are hurting out there right now and I understand that," he added. But, he said, the situation is not unlike a home with a leaky roof; if you postpone fixing the roof, the damage to the home will increase and the cost of repair – perhaps even replacement – will climb.
Spaulding said he's considered all kinds of funding options, including tolls, which studies indicate wouldn't raise enough money. Meanwhile, as lawmakers and Douglas argue about funding sources, the bridges continue to deteriorate and the cost of repair continues to climb.
And, Spaulding said, "If somebody's got a better idea, I'd love to hear it. I don't think business as usual will get us there.
"My biggest fear," he said, "is that we reach a stalemate."
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