Treasurer: Why I oppose Gov. Doug Ducey's land plan

You’ve been in office six months. Any surprises?

Most surprises have been pleasant ones. Inside the office, I am impressed with the level of expertise, fiduciary responsibility, and professionalism exhibited by staff. Many have been here for numerous treasurers, and one staff member has worked for eight. We run a tight ship where we protect the money of all Arizonans.

When dealing with the politics outside the office, sometimes it feels more like “House of Cards” than I expected.

You’re not a fan of Gov. Doug Ducey’s plan to increase withdrawals from the State Land Trust. Why?

We have to remember that this is a trust in perpetuity, meant to exist to forever benefit the education of Arizona children. It is not merely a savings or investment account we can freely withdraw from. If it was, I have no doubt a previous governor or Legislature would have spent it already over the last 100 years.

With this trust, we must abide by the prudent investor rule, we must not touch the principal, and must protect against inflation. This plan violates all three things.

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Of the flaws you identify, which is most serious?

There are many, but one thing to concentrate on is that we cannot spend principal, aka “corpus.” We may spend every penny of interest minus an adjustment for inflation, but cannot dip into principal, which this plan intends to do.

The trust currently pays out 2.5 percent toward education. Is it too conservative?

It depends on how you look at it. Under the previous formula, the amount distributed to schools varied greatly, and in 2010 went to zero. The 2012 change that set it at 2.5 percent was supported universally as a fix that would reduce volatility in payments to schools and allow the principal to grow.

At the time, then Treasurer Ducey supported keeping the payout lower than it could have been for this reason. It is possible to increase distributions by up to 50 percent to 3.75 percent while still maintaining the integrity of the trust, and is an alternative I have discussed.

Are the trust fund’s holdings being used to their maximum benefit?

No. We need to reform the approach used for generating income on leasing State Trust Land. A lease should not provide less money to schools than a sale of the land, and also does not generate property tax revenue for local schools.

The rate of return from selling and reinvesting the proceeds is far greater than holding or leasing. Without any legislative changes we can improve results merely by prioritizing selling land versus leasing.

You suggest selling more land. How should this be accomplished?

Leadership. The Land Department has a new commissioner, Lisa Atkins, and I think she may well be on the right track of doing so. She is well respected and very sharp, and I am excited to see how she does.

How are you and the governor getting along?

I have worked in the financial world for 23 years, and was CEO of a company for 14 years. I judge ideas by their merits, not by who proposed them. I am merely opposing a bad idea. I hope that we can work together on many future projects to make Arizona better and grow our economy.