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GOP candidates for Colorado Treasurer mix it up
The three Republican candidates for Colorado Treasurer mixed it up a bit in a joint appearance today before the South Metro Denver Chamber of Commerce. Their joint appearance drew the coverage of Lynn Bartels of the Denver Post’s popular blog, The Spot.
Please click on the headline to see my full report on the event and the Q & A session and links to my interviews with the candidates and links to related web site and stories.
J. J. Ament and Walker Stapleton questioned Ali Hasan’s investment experience and his financial knowledge. Hasan noted that former Treasurers Bill Owens and Mike Coffman weren’t financial experts and had strong financial people as their deputies. He said he would hire a strong CPA to be his deputy and oversee investments.
Ament and Stapleton questioned the investment experience of incumbent Democrat Treasurer Cary Kennedy, a lawyer. Ament has spent 10 years consulting with the Colorado Treasurer and state governments and state employee pension funds across the country. Stapleton is the CEO and chief financial officer of a small publicly-owned real estate investment company and has other related experience. Hasan has invested for himself and his family.
Stapleton said he has more relevant experience and education for the Treasurer’s job than any of the candidates, including the incumbent. He asserted that he’s an independent and not a “back slapping” politician. That was taken as a jab at Ament whose father was a member of the Colorado general assembly. Ament has been endorsed by three former Colorado U.S. Senators, former governor Bill Owens and numerous current and former state legislators. The other two candidates noted that they also have been endorsed by prominent Republicans.
Ament noted that Stapleton’s publicly-owned company is mostly owned by him and his parents. Stapleton said that’s not true. UPDATE: The company’s proxy statement shows the company is 48.6% owned by him and his family, including his cousins. His father owns 21.1% of the common shares and owns and shares the dispositive and voting powers of 48.6% of the shares, including the 8.9% of the shares owned by his wife and the 10% of the shares owned by Walker Stapleton, their son. Thus, Walker and his parents own 40% of the company’s voting shares and cousins own another 8.6%. If you look at Sonoma West’s proxy statement, it looks like the family owns close to 67% of the shares. But the footnotes show they own and share voting control of a total of 48.6% of the shares. The proxy statement is not clear if you don’t read the fine print, and it caused me to mislead Ament and other readers. I apologize for not understanding “dispositive powers” and reporting on the footnotes the first time I read them.
Hasan said he would stop investing in bonds issued by the money center banks that were forced to take government money under the Troubled Asset Relief Program (TARP) even though they’ve paid the money back with interest. He said he would invest as much of the state’s money as possible in Colorado-based companies. Both Ament and Stapleton have said it is wrong to call those companies “bailout companies,” as Hasan frequently does.
For political junkies, the question is, which of these men is the best candidate? Without directly answering the question, because everyone has a different take on such a subjective question and I don’t have a candidate in this contest, I’ll make these observations.
Hasan came across as a very quick study. He’s done his homework and is a very personable and skilled presenter. He seems to talk with a smile in his voice.
Stapleton exudes the confidence of someone who has been there and done that. He admits he’s still getting used to public speaking. He doesn’t sound or look like he’s having fun selling himself. He’s a serious wonk and a doer.
Ament sounds like he’s been Treasurer and knows the job inside out. As the son of a politician, business owner and trade association executive, consultant and salesman, he’s been in the public eye for a long time and likes to talk to groups.
When I interviewed each of these candidates in separate meetings, they all gave me all of the time I needed and, I thought, they all had done their homework on the Treasurer’s job and on PERA’s financial and governance problems and issues. All three candidates have informative web sites that are worth reviewing. See the links below.
The issues that were discussed today are explored in much more detail in those interviews. Click on the Interviews, Audience Questions, Answers category link below this post to find the interviews. While it’s fine for reporters and bloggers to interview politicians and others, the questions that members of audiences at political events ask also produce useful insights and answers. This is why I try to report as accurately and extensively as possible on such Q and A sessions. As usual, I’ve paraphrased the questions and cleaned up my notes in the following report on the Treasurer candidates’ Q and A with the audience at Monday’s event.
I didn’t hear the first question very well, but it was about the candidates’ qualifications to be Treasurer.
Walker Stapleton pointed out that his great grandfather, Benjamin F. Stapleton, was the mayor of Denver from 1923 to 1931 and again from 1935 to 1947. He said he hopes Denver Mayor John Hickenlooper will serve as long. Hickenlooper is running for governor.
Stapleton noted that Tom Tancredo has endorsed him.
“Our campaign isn’t about appeasing people at the Capitol,” Stapleton said, adding, “It’s about representing business people in Colorado. Business people are supporting his candidacy. They’ve created thousands of jobs. We need to get back to serving the people who create the jobs and pay taxes.”
He noted that he has raised over $300,000 and has the most cash on hand of the three Republican candidates.
“I’m the only candidate with a MBA and masters in economics,” he said. [More on this on his web site. See link below.]
“I’m only candidate who’s served in various capacities in private sector as a chief financial officer, chief investment officer and ceo,” Stapleton said.
“It’s important to have those skill sets,” he said.
He said that his skills would be important in dealing with PERA. “We need to fix PERA for long term .” He wants to make PERA a defined contribution system instead of a defined benefit system. And Stapleton pointed to the fact that members of the PERA board are also its beneficiaries, which means that there is a problem of conflict of interest on the board.
Stapleton admits that he doesn’t have the other candidates’ speaking skills and, in a jab at Hasan, that he isn’t the best dressed.
“I’m not the good old boy candidate in this race,” Stapleton said.
He comes from an independent background, he said, adding that “I’ve never been in politics before. That gives me an independent background.
You should be a businessman first and a politician second. Politics should be a temporary service and nothing more.”
Hasan said voters should “look at candidate’s history and their goals. My goals are to invest in Colorado and divest Washington losers.”
Holding up a big white board with a list of Kennedy’s contributors, Hasan pointed out that Kennedy’s contributors include JP Morgan Chase bank and that the Treasurer has invested in the bank’s bonds.
He wants to invest in the bonds of highly rated Colorado companies and “create jobs in Colorado.”
Ament said, “I don’t believe Kennedy corrupt. But I would be first treasurer in 40 years with experience in finance not just in Colorado but in other states as well. It’s a very different dynamic when you’re managing public money versus your own money or your family’s money.”
Treasurer must maintain his independence,” Ament said. “I’m running because that check and balance has disappeared. You can’t tell where governor’s office ends and Treasurer’s office begins,” he said.
Today, Ament said, there is a “love fest” between governor Bill Ritter and Treasurer Cary Kennedy.” They’ve never disagreed. Both are Democrats.
“I will restore the independence of the treasurer, and I”v got the experience to do it,” Ament said.
Question: What was the average return on your investments over the last 10 years?
Hasan replied that his return was about 10% until the financial crisis hit and then it went down. He recalled financial crises going back to the 1930s and said he has no faith in Fannie Mae, Freddie Mac or the “bailout companies.”
“I’ve adjusted. I want to invest in Colorado winners,” he said.
Ament said, “I honestly don’t know today.” He didn’t trade shares of Citigroup while he worked there. “I will continue investing” and dollar averaging, he said, and he and hopes dollar averaging will pay off over the long term.
Noting that Hasan wants to invest in the bonds of Colorado companies that provide yields of 5.7%, Ament said the bonds that provide such yields are 30-year bonds and “shouldn’t be in the state’s portfolio.” Because the state needs more liquidity and less risk than long-term bonds offer, it must invest in bonds that mature in three to five years, Ament said. Such bonds yield less than riskier long-term bonds, he noted.
Stapleton said that over the three years that he’s been the CEO, CFO and chief investment officer at his publicly-owned company, Sonoma West Holdings Inc. (SWHI.PK), “You would have quadrupled your money. In last two years we’ve distributed over $20 million in dividends.” [Links to the company’s annual report and proxy statement are below.[
The principles of investing are the same whether in real estate or in the public sector, he said, adding, “I have the most investment experience of anybody in this race.”
Ament replied, “Let’s tell the whole truth. He notes that Stapleton’s parents own most of his company’s stock. Stapleton protests that “That’s not true.”
Ament says he’s put information about the Treasurer’s activities on its web site. “There is no reason not to let the public see the whole picture. The hard part is when you get snippets of information,” he said. He said Hasan’s white boards provide only “snippets of information.”
Hasan said that he would put reports on line more frequently. He then asserts that as a consultant, Ament produced a report for Treasurer Kennedy that told her how to get around the Taxpayer Bill of Rights (TABOR) sections of the state’s constitution. This charge by Hasan has been strongly disputed by both Ament and by a former deputy treasurer.
Hasan charged that Ament advised the Treasurer to invest in Citigroup’s bonds while he had an investment in the company. He said that Ament is “Sitting on a land mine” and that he’s still getting income from Citigroup, but he didn’t say how. Citigroup doesn’t pay dividends.
Stapleton said he runs a publicly traded company and he is used to being transparent because his company files financial reports with the Securities and Exchange Commission. See links below.
“We need more transparency” in the government, he said. He asked why the performances of Colorado’s public schools haven’t improved since Amendment 23 began requiring the the state to spend more on K-12 education every year. “Why haven’t graduation rates improved? We’re giving education a free pass. Stop the process of the automatic ratchet in the state budget.” Why since Amendment 23 passed CO schools haven’t improved? Why haven’t graduatiion rates not improved. We’re giving education a free pass. Stop the process of the automatic rachett in the state budget.” In our interview and later in the session Stapleton said he’s not anti-education. He thinks education should compete for taxpayers’ money with other state programs and not get automatic budget increases every year.
Question: All three of the candidates are going into a situation where incumbent is in the other party. “You see a lack of checks and balances. What gives you in your background the ability to fix the problems in the office?”
Hasan replied, “The change I’m going to make is in the portfolio. The Treasurer has to be excellent manager. I am confident I can go in there and run an excellent department. I will work with the three investment officers in the investment division. Most of the department’s investments have maturities in three or four years.” As those bonds mature, he will divest them. He promised to “get excellent return on our money and invest in Colorado.”
Stapleton replied that Colorado independently elects the Treasurer. Kennedy has disagreed with Ritter less than 10 times. That is a rubber stamp for the governor. He would act as a change agent by bringing his credibility to the office.
Ament said that “For the last 10 years this has been my business. Everything I talked to clients had to be approved by a board and legislature. You have to be accurate and able to communicate. What I bring is experience in working with governments around the country.”
Ament said that he doesn’t want to pick fights with the governor. He wants to help the governor, whoever he will be, decide what the best financial solutions are.
The Treasurer should have access to the financials of all departments in the state government and should be able to give financial advice to all of the directors of those departments, Ament said.
Question: Former Governor Bill Owens and the South Metro Chamber supported Referendum C, which suspended parts of TABOR. What shoud the state do about the ratchet effect of TABOR?
Stapleton replied, “The fundamentals of TABOR needs to be protected at all cost. Let voters approve tax increases. TABOR could be fixed.” TABORs’ requirement that the state redistribute its budget surplus to taxpayers is a “moot point now.” There is no surplus to distribute.
“We need to look at the sacred cows like Amendment 23 and look at how we’re funding the automatic ratchet mechanisms,” Stapleton said, adding, “I just want to make sure the money is getting to the kids in the class room and isn’t cut off by the unions.” He noted that he is concerned about the education his two-year old will get in Colorado.
Ament said, “Walker and I agree.” The ratchet in TABOR opens it to attack. But the ratchet effect was removed by Referendum C. “Now have to remove required spending” provisions that voters have put in the state’s constitution. Almost 60% of state budget is mandated spending, Ament said.
Hasan said he agrees with TABOR’s author, former state representative Doug Bruce.
Hasan said that he thinks voters should strengthen TABOR. “I woud love to build a coalition of legislators to introduce a bill to make it the most permanent part of our Constituton. I would never support any kind of weakening of TABOR. If you need more money, ask the voters for it. Ref. TABOR worked until Ref. C was passed. I don’t want Colorado to look like California.”
Question: How would you change PERA’s board?
Hasan noted that the Treasurer is one of 16 on the board. He said that he would make no promises on PERA. “We still have $26 billion in PERA’s account.” He would support a 65 retirement age for state employees instead of the 50 year-old retirement age that has been in effect over the last 12 years or so. The state needs to privatize PERA, Hasan said.
Stapleton noted that the Treasurer can’t change composition of the board. The legislature does that and it has to be done, he said, adding that he would forego his PERA benefits so that he wouldn’t have a conflict of interest as a board member. PERA’s liability is $15,500 per Colorado resident versus $13,000 in CA. “You can raise hell and agitate. Our current Treasurer hasn’t done that. She hasn’t be a strong voice on the board as a representative of taxpayer.”
Ament noted that PERA’s unfunded liability is $27 billion.
The recently enacted PERA reforms don’t go far enough, he said. The state already is being sued by opponents of those reforms. “We need to have solutions.
Combined, the unfunded liabilities of states’ employee pension programs are more than $1 trillion, Ament said. Colorado isn’t the only state with problems like PERA’s unfunded liabilities. The problem is that the taxpayer has to guarantee of the investment decisions at PERA, Ament warned.
“We need to move to more like a private sector model. We need to honor obligations to retirees. Then we need to move to a defined contribution system. That will be more expensive over the next 10 years but it will save money over the long-term. We need a program sustainable and fair to taxpayers.
If I misquoted anyone or misrepresented what they were trying to say, they are invited to post corrections and clarifications in the comments section below. Or they can e-mail me.
LINKS:
Interview: Walker Stapleton would make fixing PERA top priority as Colorado Treasurer. The Business Word, 2.24.2010.
Stapleton for Colorado State Treasurer.
Interview Part 1: J.J. Ament says he would de-politicize Treasurer’s office, eliminate losses, defend TABOR. The Business Word, 2.7.2010
Interview: Ali Hasan says that as state Treasurer, he’d invest in more Colorado-based companies. The Business Word, 1.17.2010.
Ritter signs PERA pension plan changes into law. By Patrick Malone.
J.J. Ament Colorado State Treasurer.
Ali Hasan for Colorado State Treasurer.
The Political Education of Ali Hasan May Include a Run for State Treasurer.
Cary Kennedy for State Treasurer.
Sonoma West Holdings (SWHI.PK). Yahoo.com.
Sonoma West’s key statistics. Yahoo.
Sonoma West Holdings Inc. 10K annual report for Fiscal Year ended June 30, 2009.
Proxy Statement for Sonoma West Holdings.
Denver Public Library Friends Foundation
GOP Candidates for treasurer square off. By Peter Jones.
I do not have a candidate in this race.
Hasan still doesn’t understand that Colorado has NOT ONRE SINGLE CENT invested in bonds issued by the money center banks that were forced to take government money under the Troubled Asset Relief Program (TARP).
And he still doesn’t understand that you cannot pay the monthly bills with 30-year bonds.
He talks a great line and sounds good, but he knows virtually nothing about the treasury.
Posted by .(JavaScript must be enabled to view this email address) on 03/02 at 01:29 PMAnother excellent post, Don. Thank you so much for you valuable service!
Sounds like we have excellent candidates to beat Ms Kennedy this Fall.
I like Stapleton’s comment that he hopes Denver Mayor John Hickenlooper will serve as long as his father.
Posted by Kenton Johnson on 03/02 at 10:09 PM-
Posted by HsvsRsvsesv on 03/08 at 10:34 AM