GOP rivals scrap over who's qualified to be Arizona treasurer

During a televised debate Tuesday night, Norton cited his experience as founder and CEO of what is now known as Veritas Global Protection, which sells extended warranties on vehicles. He said he has to invest premiums in a way to ensure the funds will be there when claims are made.

By contrast, Katherine Haley cites her experience as owner of Oak Rose Group, which she said advises organizations on investment and long-term strategic planning.

"We maintain balance sheets,'' she said. "We have to make sure we balance our checkbook every day. We have to make sure we pay our bills.''

Norton sniffed at that.

"I think my opponent's a lovely person,'' he said. "But this is about experience. She's not qualified, frankly — and I mean this with all due respect — to be the bookkeeper at a pizza parlor.''

Haley responded that the job goes beyond deciding where to invest the dollars that come into the treasurer's office. She said it also requires leadership and planning, both skills she says she has.

Beyond that, Haley said, much of what treasurers can do with the money under their control is not on the whim of the person heading the office but constrained by statutory restrictions as well as oversight from the State Board of Investment.

"At the end of the day, you are following state statute and also what is defined in the Constitution,'' she said.

Haley chided Norton, saying he has said Arizona should manage its investments like Texas and Florida.

"They're very different states,'' she said.

Haley said she has broader experience, including working as a policy adviser in Washington, D.C. for Republicans John Boehner and Paul Ryan when they were speakers of the U.S. House.

Norton dismissed Boehner and Ryan as "swamp rats,'' a term that had been used against both by some hardline conservatives to criticize more establishment politicians.

Haley's view of the role of the treasurer's office is also much closer to that of Republican Kimberly Yee, the current treasurer, who, after serving two four-year terms, is now running for state superintendent of public instruction. Yee told Capitol Media Services after the debate on KAET-TV that whoever is treasurer should not be making individual decisions on investments.

"The treasurer should be the manager of the agency and hire the best individuals qualified,'' said Yee.

Haley made it a point during the debate to say she has been endorsed by Yee. Norton clapped back with his endorsements from the Free Enterprise Club, Turning Point USA, and Arizona Senate President Warren Petersen.

Norton dismissed the argument that it is the job of the treasurer to run the office and ensure it is staffed by the people who are the actual experts in their fields.

"We're not trying to hire a glorified HR manager to manage unelected bureaucrats,'' he said. "We're electing the chief banking and investment officer of our state.''

Haley said all that is true. But she said that doesn't mean Arizona should have a treasurer who has overly broad ideas of how to earn more money with the cash the state needs to pay its bills.

"We cannot make risky bets,'' Haley said. She said what Norton wants is to "sell our portfolio to the highest bidder with the goal of, oh, perhaps, we'll get higher yields.''

Norton contends the state could make more on the money it has invested.

He poked fun at Yee, who, in press releases, said the assets her office is managing nearly doubled from $15.4 billion in 2019 when she was first elected.

He said in that time there was growth in state population and property value, state lands were sold off and the proceeds put into the trust, and cities, which can invest through the treasurer's office, have gained the ability to tax internet sales.

"If you take our portfolio to somebody who actually understands investments, they're going to say we should have about $3 billion to $5 billion more than we actually do,'' Norton said.

"I'm not saying we should take risky bets,'' he said. "I want to go to the office every day, do my job, and apply my experience to getting better returns for the taxpayers.''

One place where the treasurer has played a role, or at least had some input, has been on the question of how much extra money can be withdrawn from the special education trust account.

Arizona got about 10 million acres of land from the federal government when it became a state in 1912, with the restriction that it be held for the benefit of certain entities, primarily public schools. About 9.2 million acres remain, along with more than $10 billion the trust invested in, using money from sales and leases of the land.

A formula in place for years gave schools 2.5% of the value of the trust annually, a figure that was designed to ensure level distributions without endangering the principal.

In 2016, however, voters narrowly approved Proposition 123, a measure to boost that annual distribution to 6.9%, generating an extra $300 million.

But that authorization has since expired. And lawmakers, along with Democratic Gov. Katie Hobbs, are now debating whether to ask voters to renew that, and at what level.

That's where the views of the treasurer can come in.

The governor at one point proposed boosting the distribution to 8.9%, with GOP lawmakers proposing to keep it at 6.9%.

Yee already weighed in, rejecting both proposals as unwise and saying the prudent figure would be more in the neighborhood of between 4% and 5%.

"We do have to protect the principal,'' Haley said when asked her views on renewal. "It's an endowment,'' she said, having to last not just through today but into the future.

"On average, an endowment distributes about 5%,'' Haley said, saying she would consider that a safe figure going forward.

Norton blasted the numbers originally proposed by Hobbs as "absolutely ridiculous,'' though the governor, in her state budget proposal released in January, is not on the same page as the Republicans at 6.9%. But Norton refused to say, both during the TV appearance and when asked afterward, whether he agrees with that GOP figure — or what he believes would be a proper level of withdrawal going forward to both protect the trust and yet still provide more dollars for K-12 education.

What history has shown is the difficulty of making predictions of a return on investment on a long-term basis.

When Proposition 123 went to the ballot in 2016, it was opposed by Jeff DeWit, the Republican state treasurer at the time. He predicted that the higher withdrawal would cut into the principal of the trust and ultimately leave public schools with less money.

As it turned out, the economy —and the rate of return on investments — remained strong enough that the principal actually increased even with the higher withdrawals.

Whoever wins the July 21 primary between Haley and Norton will face off against Democrat Nick Mansour in the November general election.