The three candidates for state treasurer this fall all appear to deliver the same message: in tough economic times, Kentucky’s government must do more with less.
Incumbent Democrat Todd Hollenbach says by deploying a team of volunteers, he’s created new initiatives without cost to the taxpayer.
Republican K.C. Crosbie argues Hollenbach hasn’t made wise decisions on how to reign in spending, and has neglected his duty as a check-and-balance on executive branch spending.
Libertarian Party candidate Ken Moellman, meanwhile, offers up a different approach: after his first year in office, he pledges to eliminate the role of state treasurer altogether - a job he believes has been rendered obsolete by computer accounting systems and redundant government positions.
In his first term as treasurer, Hollenbach insists he has done more with less - instituting new financial literacy programs and a more proactive approach to returning Kentuckians’ unclaimed property, all on a budget that’s been slashed about 27 percent since he took office.
On Wednesday, Hollenbach was in Lexington at a “Treasure Finders” volunteer phone bank. His office set up similar banks in roughly half of Kentucky’s counties in an attempt to contact holders of unclaimed property - such as money in inactive bank accounts - by networking locally. Local volunteers use their own cell phones to make the calls.
“It’s important, I think, to note that it’s all volunteer-based, so this program does not cost the taxpayers an additional dime,” Hollenbach said.
The Treasure Finders program has proven to be a success, he said. His office set a record, with more than $48 million in property restored to its owner in three-and-a-half years.
Continuing the Treasure Finders and financial literacy programs are key goals for Hollenbach’s second term in office, he said.
He said he’s also proud of a job fair program, another volunteer-based initiative, in which he worked with local agencies to organize fairs in several southeastern and western Kentucky counties.
Volunteers also work with his office’s Financial Literacy Boot Camps, which target high school seniors, Hollenbach said. The 2008 economic meltdown highlighted many adults’ lack of training in how to make sound financial decisions, and seniors will soon face similar choices, Hollenbach said. The program is expected to reach 61 high schools this semester, he said.
But Hollenbach has had to cut expenses, too, while trying to maintain the staff necessary to catch up on the treasury’s bookkeeping.
“When I took office the books hadn’t been balanced for about two years,” Hollenbach said.
A new accounting system that had been installed in the office wasn’t capable of reconciliation, and the treasury had fallen behind, he said. So instead of hiring a press secretary, Hollenbach hired an additional staffer to work on reconciliations, and his office accomplished what he called a “massive, Herculean undertaking.”
“We did essentially five years of reconciliation in three years’ time,” he said.
The books were finally reconciled earlier this year.
In the meantime, Hollenbach claims he has cut expenses in other ways.
“Probably the first thing I did within months of taking office is I turned in my state car,” he said. Hollenbach said he never accepted compensation for gas expenses and stopped receiving any compensation for travel after his first year.
Because Hollenbach is an attorney, he eliminated a $50,000 annual legal services contract. He also cut a $50,000 annual expense for janitorial services.
Encouraging education on the issue of tax reform and promoting an open, bipartisan discussion with lawmakers has also been a focus of Hollenbach’s term. He pointed to a 2010 symposium in which he gathered bipartisan experts from throughout the region to discuss tax reform in a public forum targeted at lawmakers.
“I decided that doing what I did and approaching it from the educational standpoint was a great way to get the discussion going,” he said. “What I’d like to do is expand on that platform to address budgeting and spending reform.”
Crosbie wants the state treasurer’s office to keep its accounts balanced and serve as a strong check on executive spending - two duties she feels Hollenbach hasn’t performed adequately.
Crosbie is also a strong opponent of raising taxes. She supports tax reform measures, which she believes could encourage companies to set up in Kentucky.
She said her voting record during her three years on the Lexington-Fayette Urban County Council reflects her opposition to tax increases and her fiscal conservatism.
“I have been often times the only, lone voice against increasing taxes, increasing fees. My philosophy is we have to do more with less,” she said.
Though the state treasurer cannot vote on tax issues, the position as the state’s chief financial officer still vests him or her with the opportunity to advise lawmakers, Crosbie said.
“The treasurer certainly has a bully pulpit to talk about financial issues,” she said. “We hear a lot about tax reform and how we need to make Kentucky a place that people want to come and do business, and certainly as treasurer, I would consider being the person who would go around and help lobby for tax reform.”
Crosbie insists that she would implement a stronger oversight on the executive branch’s spending than Hollenbach has. She pointed to an incident in September, when the governor borrowed $18 million from the commonwealth to make a $28 million interest payment on a federal loan. Many legislators insisted this move had to be authorized by the General Assembly. While Crosbie acknowledged the payment had to be made, she said the treasurer failed to ensure the proper steps were taken.
“I think it’s a process issue or a procedural issue, where clearly there are legislators that feel like this payment was unconstitutional,” she said. “The problem with our current treasurer is he was silent.”
Crosbie added that it took Hollenbach’s office far too much time to reconcile the state’s balance sheet. Hollenbach insists the state’s books hadn’t been balanced in two years before he took office, and points to reconciling the books earlier this year as an accomplishment.
“Through open records requests, we have been able to find that 80 percent of that job was done when he took office,” she said.
Crosbie also claimed she is in possession of letters written to the treasurer from employees asking that he focus more resources on reconciliation.
Despite steep cuts to treasurer’s office budget, Crosbie said she is confident she can work within the budget she’s allotted. Hollenbach had to cut janitorial services to the office because he hired too many employees whose salaries are at the top of the pay scale, she said. Crosbie didn’t specify whether she would restore janitorial services, but she said she would be looking for possible cuts to make “at the top.”
“They are running on a very tight budget with a lot of stress, and I think it’s a misuse of taxpayer dollars to have merit employees, who should be working on unclaimed properties and reconciliation, scrubbing toilets,” she said.
Crosbie said she would be “very active” in promoting financial literacy throughout the state. However, she emphasized that there should be a system for measuring how well such programs work.
“Right now, there are programs in place, but there are no outcome measures,” Crosbie said.
She added she would like to partner with private industry and cooperate with financial education programs that are already in place in many schools.
The Unclaimed Property Division could be managed more efficiently, as well, Crosbie said. Hollenbach’s Treasure Finders program, she said, is “political grandstanding,” more an effort to “get his name out there” than to return property efficiently, which could be better done through the use of technology or the Internet.
Her first priority would be to cut wait times. Hollenbach has pointed to record amounts of property returned, but Crosbie contends people are still forced to wait far too long.
“He says he has returned more, but he probably could have returned a lot more if he didn’t take so long - six to eight months - for people to get their property,” she said.
Most candidates running for public office expect to hold the job for a solid four years. Moellman has other ideas. As the Libertarian Party candidate, he is running for the office of treasurer in order to eliminate it.
“Kentucky has what would be considered, or what I call, a weak treasurer,” he said. “The constitutional duties of the treasurer are basically to be elected, term limits, and that’s about it.”
Moellman contends that computer-based accounting systems have rendered the state treasurer obsolete.
“The reason a treasurer existed was that it was a check and balance,” historically providing oversight for the spending of other state offices, including the executive branch, Moellman said. Today, the state auditor and computer-based systems provide the same sort of oversight, he argued.
“Computers are what print every check. They log all the checks that come in. The computer is that check and balance,” he said.
The state auditor’s office also provides a service that is somewhat redundant to what the treasurer accomplishes, Moellman said, as the auditor already accesses and oversees the accounts of state agencies.
“Having a good, strong set of checks and balances on any agency that is spending tax money is a good thing. ... The auditor already does this anyway. It’s their job to look into where the money is being spent,” he said.
Moellman would like to eliminate the position of treasurer and two other top positions in the office - assistant treasurer and press secretary - while moving the rest of the office’s roughly 30 employees under other divisions within the executive branch.
“By eliminating those three roles, we’re basically cutting out $300,000 in annual salaries, and also expenses, benefits and the pension on that $300,000, as well,” he said.
Moellman said he’ll spend his first 11 months working to streamline operations within the treasurer’s office. In 15 years working in information technology, Moellman said he’s gained a great deal of experience streamlining companies. He pointed to two instances in which he’s “automated myself out of my own job.”
“The goal here is to transfer a clean, efficient, operating office,” he said, “because otherwise they won’t accept the office.”
In December 2012, it will be time to “put the change into effect,” transferring employees to their new offices for 30-35 days until the General Assembly convenes in January 2013.
Then, “we would simply ask that Kentucky law be changed to what we’ve already implemented,” he said.
Moellman acknowledged several sections of the Kentucky Constitution would have to be revised to eliminate mention of the treasurer.
During his year as treasurer, Moellman insists he wouldn’t draw a state pension.
“What I feel is that elected officials should not collect a pension,” he said. “We’re elected to serve, not to get paid by the state for the rest of our lives.”
While Hollenbach has trumpeted financial literacy education and unclaimed property programs, Moellman said he doesn’t believe these initiatives must remain in the treasurer’s office. He did not specify what government division may oversee the Unclaimed Properties Division if the treasurer’s office is dissolved, explaining he would have to confirm that with the receiving office.
But the division ought to be streamlined before it makes the move, Moellman added.
“We need to make it easier for people to claim the smaller property so we can clear the books of some of those,” he said.
Meanwhile, financial literacy relies a great deal on personal responsibility, he said.
“Being able to effectively teach fiscal literacy to a million children as one person, I don’t think is necessarily a reasonable goal,” he said.
Once the treasurer’s legal and constitutional role has been eliminated, Moellman - who says he never looked to run for public office - said he’ll be eager to return to his chosen career.
“I work in I.T. I love my field,” he said. “If I’m able to get into the office, it’ll be something that I can get accomplished, because I have no vested interest in the office remaining. I don’t have any qualms with getting rid of my own job.”
In favor of a state treasurer
Hollenbach and Crosbie argue the No. 1 reason the state treasurer’s office should not be eliminated is because it provides an important check-and-balance on spending within the executive branch.
With regard to a $28 million interest payment made in September, Hollenbach said he went to the governor and asked for proof the governor had the authority to authorize that payment. That’s something a computer can’t do, he said.
Segregation of duties within the executive branch would be upset if the position of treasurer was eliminated, Hollenbach added. The treasurer checks the accounting of government agencies before the auditor does, so the auditor taking on treasurer’s duties would present a conflict of interest, he said.
“If the auditor was the one saying that this payment’s okay, and the auditor was also the one that reconciled the books - then that puts the auditor at kind of a conflict,” he said.
Meanwhile, bureaucracy would expand and, because an elected official is no longer checking the governor’s spending, those providing that check-and-balance will be hired by the governor - another conflict, Hollenbach and Crosbie agreed.
“How can you be a check-and-balance on the governor and his spending when you’re appointed by the governor?” Crosbie asked.
Battle for the ballot
On Aug. 2, Moellman turned in a petition of more than 8,100 signatures in order to have his name placed on the ballot. Soon after, two Republican activists filed a lawsuit claiming Moellman didn’t have enough valid signatures to be on the ballot.
Third-party candidates are required to have 5,000 signatures to be included on a state election ballot, while Republicans and Democrats are required to have only two signatures.
Crosbie said she asked the activists to drop their lawsuit, despite her belief that he had not collected the required number of signatures.
“I believe that Mr. Moellman is not a valid candidate. I know that his signatures were reviewed and that there were multiple issues, including out-of-state people that had signed,” she said. “I didn’t want my race to turn into an issue about Mr. Moellman’s signatures and their validity.”
Moellman insists that he had enough valid signatures. In a random sampling conducted by his campaign, they had a 70-75 percent validity rate, he said. It’s inevitable many signatures will be invalid, which is why his campaign made sure to get more than the required number of signatures, he said.
“No matter how many times you asked someone, ‘Are you a registered Kentucky voter?’, a portion of them will say yes when they’re not,” he said.