Candidate: Pass the gravy, please
The final meeting of the Delaware Economic Financial Advisory Committee this month produced no windfalls for state legislators to balance the budget. Instead, officials will need to reduce spending this year and next year by an aggregate of about $50 million versus the estimates they were working off back in September of 2013. Now, that may sound like a significant drop, but recall that our general fund spending is nearly $4 billion.
By most reckonings, cutting about one half of 1 percent over the next two years should not be cause for the rending of clothing and the tearing out of hair. But you would not know it by the dour attitude and spirit of defeat pervading our General Assembly. Quoted House Speaker Pete Schwartzkopf, “Right now, going into June, my priority is a balanced budget. Anything else is gravy.”
While I concur with the speaker’s priority, his conception of “gravy” is quite broad, and not everyone considers it a frivolous condiment. The governor, for one, remains committed to spending several hundred million dollars on infrastructure projects for both roads and water. “Racino” operators desire a restructuring of the 43 percent of gaming revenue going to the state. Protectors of our incorporation franchise want a less aggressive enforcement of our escheat collections - now more than 15 percent of our general fund. There are even some still seeking to have the “temporary” tax hikes of 2009 on those earning more than $60,000 actually made temporary. For all of them, these will be dry years - gravy is in short supply.
To me, this suggests a problem. If there is no capacity in our 62-person General Assembly to seriously weigh other matters, if the governor’s signature measures cannot be prioritized, and if the totality of the proposals from other quarters are to be suspended, all due to a decline in forecast revenues of .5 percent, then I am concerned that we are lost. And, not for want of financial practices and processes, but precisely because of them.
While I may sound like a heretic for suggesting that the way we do our state finances is broken, consider a few questions: Does our finance system inspire confidence and encourage private investment and growth? Is there a clear prioritization of spending and a commitment to getting the highest return on our collective resources? Are we better informed of our overall financial position and able to make better decisions as a consequence? If you are like me, you will have said “no” or perhaps “hell no” to each of the foregoing.
My point is as follows: a finance system that fails to achieve certainty, accountability and transparency is not much of a finance system. Yes, I can hear the rebuttals coming now - that we have a AAA bond rating, an award-winning annual report, an online checkbook, etc. All true, but by whose metrics are we to judge the worthiness of our finance system? Bond underwriters? Government accounting experts? “Open government” proponents? How about John Q. Public? By the average Delawarean’s standard, our state finances are an impenetrable source of both angst and dismay.
I have spent 20 years in finance as an investor, money manager and chief financial officer. My experience is unambiguous: organizations with good finance systems succeed; organizations with bad finance systems fail. Moreover, even good finance systems must change and adapt with the times.
In Delaware, we last meaningfully addressed our finance system in the late 1970s during a truly dark budgetary period. Then, our government rose to the task and did major financial reform! In the roughly 35 years since, however, we have authored barely any minor reform, and more alarmingly, none since the lights almost went out in the most recent financial turmoil. It is time for a major upgrade before it is too late.
I officially launched my campaign for State Treasurer just before the Memorial Day weekend with two themes. First, I believe that there should be a financial professional in charge of the management of our public investments and the monies that come and go from our state’s coffers. Filling the treasurer’s office with someone with no finance background sends a clear message that we do not take our state’s finances seriously.
Second, I want to make Delaware “First in Finance.” I view a commitment to building the most solid fiscal foundation for our state as both good defense and good offense - something that will set Delaware apart from every other state in the nation. Viewed in this light, sound finance is a competitive advantage, an economic development measure, and the surest way to attract business to our state, grow our own job base and generate long-term prosperity for our people.
As someone who has spent his life fixing things that are fiscally broken, I am driven to do the same for my home state. While no finance system can guarantee us that we can have our cake and eat it too, for Pete’s sake, we should at least have a system that allows us to enjoy a little gravy alongside an otherwise well-balanced meal.
candidate for State Treasurer