Two issues stand out when it comes to the treasurer and how the position affects people’s lives: economic development and state pensions. Both Michael Bowman and Mark Metcalf, the Democratic and Republican candidates, respectively, discuss these issues in their campaign. Yet, just what to do about these issues diverges between the two candidates.
Economic Development
As it relates to economic and workforce development, the treasurer’s role on state boards and duty as the chair of the State Investment Commission position that person as one of the most influential office-holders when it comes to determining how tax dollars are invested.
For Bowman’s part, he’s all in for investments in greener technology and infrastructure investment. As such, he complimented the Brent Spence Bridge Corridor project, which occurred under Gov. Andy Beshear’s tenure.
“In terms of job creation, job growth, we’re looking at the electric vehicle battery plants that are being built just north of Bowling Green and outside of Elizabethtown,” Bowman said.
“We see on those projects alone, what is amounting to north of $5 billion of investment that will lead to thousands of jobs,” he said.
Those sorts of jobs will not only secure gainful employment for established Kentuckians, he said, but will also serve as an incentive to attract other workers and businesses from out of state.
Bowman said that a unified executive branch under Beshear would ensure tax investments in these sorts of energy and infrastructure projects.
Metcalf, meanwhile, has emphasized not new but established forms of energy and fuel, namely fossil fuels, for securing jobs for Kentucky.
“We have the third-largest store of coal in the nation,” Metcalf said in an April interview with Kentucky Educational Television (KET). “We have petroleum reserves, and we have the second-largest amount of natural gas in the nation.”
By Metcalf’s account, these resources, which have defined the economic production of whole regions of the state in the past, have been pushed out of investment by banks that have chosen to prioritize alternative forms of energy and new forms of management.
“We’re not exploiting these, because we’re being held back by the investment banks that have decided that the winners here are going to be the green technologies, not the lowest-cost, most-efficient means by which people can fuel their cars and their homes,” Metcalf said in the same interview.
Specifically, Metcalf lays blame on Environmental, Social and Governance, or ESG, mandates at large investment banks. ESG is a management framework that prompts businesses to consider the environmental and social impacts of their work.
On his website, Metcalf states that his time in office would “advocate that Kentucky halt all taxpayer investments in any funds that oppose the use of fossil fuels” and “… oppose the granting or maintenance of business licenses permitting pro-ESG entities from doing business in Kentucky.”
State Pensions
Kentucky’s state-employee pension system is a recurring topic of conversation at every level of government and all across the political spectrum. There are several flavors of pensions for government employees, varying by profession. These include pensions for teachers, police and fire as well as administrative employees.
State pensions in Kentucky are classified as defined benefit plans, meaning that the employer is responsible for ensuring pensioners receive a predetermined benefit amount based on their contributions and length of employment when they retire. This amount the state must set aside is determined through actuarial scientists, who run complex statistical analyses to determine how an investment will grow or shrink over time.
This is in contrast to defined contribution plans, where employees are responsible for managing their own return on investments – 401Ks and IRA accounts are examples of defined contribution plans.
Government pensions remain one of the main incentives for entering government work, because they guarantee a handsome payout upon retirement, even if government salaries can rarely compete with those of the private sector.
Where things get tricky is the fact that Kentucky’s pensions have been woefully underfunded for years and have gone through multiple rounds of reforms. As a result, local governments are often responsible for large payments into the state’s pension plan – payments so large they can eat up huge chunks of a personnel budget. This has reverberating effects not only electorally but also in terms of recruiting public servants such as police officers, firefighters and teachers.
Steve Webb, Covington’s finance director who’s also worked in Indiana’s pension office, expressed the problem this way:
“The state pension plan is incredibly important to the municipal governments of Kentucky. We need the plan to be solvent, as it is an important piece of our compensation plan, but the rate can also cause fiscal pressures that can affect our talent acquisition and retention,
Webb said. “This is particularly important in Northern Kentucky, as we are in a Tri-State area competing with Ohio and Indiana municipalities for talent. It’s an incredibly difficult balance to strike.”
Meanwhile, Bowman elaborated on his perspective.
“I think it’s … having a state government that takes its promise seriously, that fully funds the actuarially required payments for the contributions to these plans every year, ensuring that we’re not falling behind,” he said when asked about what he would do about the pension system.
He points to the treasurer’s role on the Teachers’ Retirement System board as an example.
The treasurer would “be able to ask the questions about where we’re investing this money to make the maximum return on those investments to ensure that the funds stay solvent,” Bowman said. “(And to ensure) that we’re not creating legislation or policy that puts the fund itself at risk by starving the pot.”
Metcalf shared an additional perspective.
“What I want to make certain is that … people have jobs and (I) want to make certain that taxpayers get their value from this office,” Metcalf said. “(I want to make certain people) get their money back and that we shrink the debt in the pension funds so that it is safe for our pension-holders.”